ATP 107-CONVEYANCING

CONVEYANCING

ATP 107

TAUGHT BY: MS.KIAMA

FROM FEBURUARY 2016

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ATP 107-CONVEYANCING

AIMS AND OBJECTIVES OF THE COURSE

The main aim of the course is to ensure that the student obtain an understanding of
the general principles of conveyancing law and practice and familiarize the students
with the concepts and protocols of conveyancing.
This enables the students to identify the critical stages of a conveyancing transaction
and ensure they can plan and complete all the stages of a freehold or leasehold
conveyance, including drafting.
Knowledge of land law is presupposed while knowledge of Contract law, Succession
Law and Equity is critical.
The course is designed to ensure that the student appreciates the role of an
advocate as the necessary intruder in conveyancing transaction.
Third, the course is also intended to ensure that the student develops an
appreciation of how the drafting of conveyancing instruments does determine the
legal consequences and effect of those instruments.
Most importantly, the student must be able to draft, stamp and register various
conveyancing instruments and understand all procedures preceding registration
including valuation, stamping and obtaining the requisite completion documents..

Recommended Text Books

1. Bowman & Tyler. “The Elements of Conveyancing” (Lond) 8th Edition Sweet &
Maxwell
2. P.L. Onalo “Land Law and Conveyancing in Kenya”
3. Wanjala Smoking “Land Law & Disputes in Kenya” (Nrb) Oxford University Press
4. Robert Abbey & Mark Richards “A practical Approach to Conveyancing” (Lon)
Blackstone Press 2000
5. Tom Ojienda “Conveyancing Principles and Practise” (Nrb) 2008
6. Tudor Jackson “An introduction to the Laws of Kenya
7. Okoth Ogendo Tenants of the Crown
8. Sessional Paper No.3
9. G.H. Treitel “the Law of Contract” (Lond) 11th Edition Sweet & Maxwell 2005
10. I.C.F. Spry “The Principles of Equitable Remedies” (Lond) Sweet & Maxwell, 1997
11. Diane Chapple “Land Law” (Lond) Longman 2008
12. Halsburys Laws of England

STATUTES
The following Statutes are Mandatory
1. Advocates Act
2. The Community Land Act No. 27 of 2016
3. The Constitution of Kenya 2010
4. The Law of Contract Act Cap 23
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5. The Registration of Documents Act 285

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6. The Sectional Properties Act 21 of 1987

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7. The Land Act 6 of 2012

8. Land Laws Amendment Act No. 28 of 2016
9. The Land Registration Act 3 of 2012
10. The National Land Commission Act
11. Matrimonial Property Act 49 of 2013
12. The Stamp Duty Act Cap 480

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ATP 107-CONVEYANCING

IMPORTANT TERMINOLOGIES IN CONVEYANCING

As in all professions, words and phrases are used that are meaningless to a lay
person, particularly when an abbreviation is used.
The following is a list of the most commonly used terms and general requirements
in conveyancing.

ALLOTMENT An allocation of land by the Commissioner of Lands to a person by way

of a letter of allocation.

ASSENT Describes the document under the terms of which an executor or

administrator vests title to a property in a beneficiary under the will or
on the intestacy of a deceased. Applicable to properties registered
under the GLA, LTA & RTA.

ASSIGN The act of transferring leasehold title.

ASSIGNMENT Describes the transferring leasehold title under GLA and LTA.

ATTESTATION To witness the execution of a Conveyance.

CHARGEE Holder of a Charge.

CHARGOR Person creating a Charge in favour of a Chargee.

CHARGE Species of security that confers no interest in land but gives property
charged as security.

CONVEY The act of transferring a freehold title.

CONVEYANCE Describes the deed transferring a freehold title under GLA and LTA.
CONTROLLED
TRANSACTION A transaction falling under the Land Control Act.

DEED A document executed under seal.

DEMISE A noun to describe a lease and as a verb to describe the act of leasing
DISPOSITION Transfer of interest in land.
FEE SIMPLE A freehold interest.
HEREDITAMENT A parcel of freehold land.
LEASE Interest in land for a fixed term or period.
LESSOR Person giving a lease.
LICENSE Permission granted to occupy ones land personally
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PARCEL A separately identified plot of land either by reason of its boundaries or

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it having a separate or distinct title.

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MORTGAGEE Holder of a Mortgage.

MORTGAGE Disposition of interest in land as security for a debt.
MORTGAGOR Person creating a Mortgage in favour of the Lender.
DISCHARGE Release of security under RLA/RTA
RECONVEYANCE Release of freehold mortgage under LTA/GLA
REASSIGNMENT Release of leasehold mortgage under LTA/GLA
VENDOR Person selling or intending to sell or transfer land or lease.
(SELLER)
PURCHASER Person buying land or lease.
(BUYER)

TITLE DOCUMENTS USED IN CONVEYANCING

Title Deeds Title Document under the GLA
Conveyance Title Document under the GLA
Certificate of Ownership Title Document under the LTA
Grant Title Document under the RTA
Certificate of Title Title Document under the RTA
Lease Title Document under the RTA
Land Certificate Title Document under the RLA
Certificate of Lease Title Document under the RLA
Title Deed Title Document under the RLA

REGISTRARS
Registrar of Documents RDA
Registrar of Titles RTA
District Lands Registrar RLA
Government Lands Registrar GLA

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ATP 107-CONVEYANCING

LECTURE 1: FRIDAY 5 FEBRUARY 2016- MORNING SESSION (LECTURE HALL A)

TOPIC 1: CONVEYANCING DEFINITION AND SCOPE

Definition of Conveyancing

There are various definition given by various scholars the table below will give a general
understanding on what conveyancing is

Abbey Robert and Richards Mark Conveyancing as ‘the process by which legal title to property
is transferred
Black’s Law Dictionary conveyancing is the act of or business of drafting and
preparing legal instruments, especially those (such as deeds
or leases) that transfer an interest in real property
Peter Butt “Conveyancing is the art or science of preparing documents
and investigating title in connection with the creation and
assurance on interests of interests in land. Despite its
connection with the word ‘conveyance’, the term in practice
is not limited to use in connection with old system title but is
used without discrimination in the context of all types of title
Professor Philip Kenny and Russell conveyancing is concerned with the legal mechanisms
Hewitson whereby the ownership of land or of an interest in land is
transferred from one person to another.’ In this regard, they
note that conveyancing is about how to transfer ownership
in land, about the rights of the parties at different stages in
real property transactions and about their respective
positions if things should go wrong in the course of the
transaction.

Council of Licensed Conveyancers in Conveyancing as “the legal process of transferring a house or

England and Wales flat, commercial property or piece of land from one owner to
another”.
Graveland v Porter 10 ch. 8 Cairns Cairns L.J. stated “there is no magic in the word conveyance.
L.J. It means an instrument conveying an interest in land from
one person to another”.

A few conclusions can be made from the above definitions

1. Essentially, therefore, conveyancing, convey a connotation of movement from a point A to a

point B i.e. the transfer of rights in property from a person A to a person B. It is important,
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however, to note that conveyancing relates only to land or an interest(s) in land. Further, it
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is vital to appreciate that the key to understanding the nature of conveyancing is to

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ATP 107-CONVEYANCING

appreciate how it calls upon various disparate areas of law. In this light, the relationship
between conveyancing and other laws must necessarily be considered.
2. Both definitions may however be limiting as conveyancing involves more than just drafting
and registering documents. Conveyancing may also involve a simple modification of title or
even an involuntary transfer of an interest e.g. sale by a mortgagee. Conveyancing may thus
be more appropriately defined as the art or science of effecting the transfer of legal property
or modifying interest in relation to property by means of a written document. The three
critical ingredients are thus:
i. the process,
ii. the legal title and
iii. the transferor modification.
3. Conveyancing is therefore a generic term used to sum up the procedures used in disposal
and/or acquisition of interest in real property. The process is what is basically referred to as
Conveyancing practice or protocol; which refers to the branch of advocacy in real property
transactions or the procedural side of the coin of which the law of property is the
substantive side. The legal title or interest to be transferred or modified must be legal in the
strictest sense of the word. The transferee must be seized of a legal title. Consequently,
protocol or process will demand that a Conveyancer investigates and ascertains that the title
to be transferred or modified is legal.
4. Conveyancing is the area of an Advocate’s business that deals with the alienation of an
interest in land from one person to another by means of an appropriate instrument or
document. Conveyance is an instrument transferring an interest in land from one person to
another. Examples of conveyances are:
i. Mortgage or Charge
ii. Transfer
iii. Lease etc

NATURE OF CONVEYANCING
What is the underlying nature of conveyancing?
i. Is it jurisdictional?
ii. Is it a private contract?

First theory is that it is a quasi-jurisdictional act. Section 3 of the Law of Contract Act Cap 23.

23 (3) No suit shall be brought upon a contract for the disposition of an interest in land unless-
(a) the contract upon which the suit is founded-
i. is in writing;
ii. is signed by all the parties thereto; and
(b) the signature of each party signing has been attested by a witness who is present when the
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contract was signed by such party:

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Provided that this subsection shall not apply to a contract made in the course of a public auction by

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ATP 107-CONVEYANCING

an auctioneer within the meaning of the Auctioneers Act, nor shall anything in it affect the creation
of a resulting, implied or constructive trust.

The second theory is that it is a private act (contractual) and the state has no law (right?)
whatsoever to interfere.
Hence Conveyancing is a hybrid of both contracts and jurisdiction.
It has everything to do with domestic law. There are mandatory rules that must be observed.
Conveyancing is the transfer of an interest in property. Abbey & Richards definition – the
process by which legal title to property is transferred. The word conveyancing derives its
meaning from this very definition. It is basically to convey. Documents used to convey
interest from one party to another.
Conveyancing is the voluntary transfer of interest in property. However, there are instances
where conveyances are compulsory. E.g where a chargee or mortgagee is exercising its
statutory power of sale, where by operation of the law, interest must be transferred to
another party.
Three critical elements of the definition:-
1. Process – All applications from the appointment of the estate agent to the time you
actually get a duly registered title.
2. Legal Title interest being transferred – What is transferred must be legal. (Qn: How
do you ascertain legality of title in RLA documents? ).
3. Transfer – Voluntary transfer. You can also transfer title to yourself e.g. if you are a
beneficiary of an estate. Also includes the modification of ownership e.g. in joint
tenants.
Conveyancing is the art or science of conveying or effecting the transfer of property or
modifying interests in relation to the property by means of a written document.
Conveyancing is the only branch of law that takes from all other branches of the law. e.g. the
law of contract – the sale agreement. Property Law and Land Law, Equity, Commercial Law
etc.
The process is what is basically referred to as Conveyancing practice or protocol – which
refers to the branch of advocacy in real property transactions or the procedural side of the
coin of which the law of property is the substantive side.
The legal title or interest to be transferred or modified must be legal in the strictest sense of
the word. The transferee must be seized of a legal title. Consequently, protocol or process
will demand that a Conveyancer investigates and ascertains that the title to be transferred
or modified is legal. [Reflections:
How expansive is the word “legal” in these respects? Does it refer to and include previous
“illegal” acquisitions subsequently legalized?].
“Conveyance” describes the document used to effect the conveyancing, and “Conveyancer”
describes the qualified professional or specialist lawyer retained by the parties to a
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transaction to deal with the paper work and finances.

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ATP 107-CONVEYANCING

His role is to represent the buyer or seller or the mortgagor. Generally Conveyancers duties
are wide and varied and are not limited to merely drafting the conveyance and registering
the same. The duties include:
i. Advising clients on buying and selling process + effect of transferring an interest in
land
ii. Investigating title
iii. Drafting the K with sale details,offers,leases,mortgages,transfer
iv. Liasing with mortgagees,lenders,estate agents,Advocates,etc
v. Paying taxes eg Stamp duty, land rent,VAT,CGT,Rates
vi. Keeping records of payments and finally preparing a completion statement
vii. Perfecting the documentation including proper execution, completion and
registration
[Reflection: What skills and knowledge will I need as a conveyancer?]
The process of transfer or modification of interest must be by way of a written document.
This is a statutory requirement as the transfer or modification is deemed only to be
complete once registration has been effected as demanded by the relevant statute. It is
noteworthy that the transfer or modification can be to oneself [cf. Assents and
transmissions].
To appreciate conveyancing protocols better one ought to be familiar with the other
branches of law dealing with real property [Land Law], Obligations [Contract law] and
remedies/restitution [equity].
An appreciation of these branches of the law is thus necessary as advise to client will run
and cross through literally all of them in any ordinary conveyancing transaction.
[Reflection: what is the relationship of the other branches of law in particular the law of
contarct,the law of torts, the law of equity, the law of real property to conveyancing law and
practice?]
A Conveyancer must however not only be knowledgeable but also ethical and defensive.
See the following two cases
i. Juma Muchemi v Waweru Gatonye HCCC No.853 of 2002 NBI
ii. Momanyi V Hatimy 2003 KLR 545

Juma Muchemi v Charles Waweru Gatonye T/A Waweru Gatonye & Co. Advocates HCCC No. 853 of
2002,
The advocate failed to conduct a search. The advocate was sued and his defence was that “In any
event, you my client could not have been in a position to complete this transaction because the
plaintiff had failed to secure requisite finances” Kasango J dismissed the suit. (!)
Momanyi v Hatimy & Anor [2003] KLR 545
The advocate was sued in negligence and misrepresentation. The advocate had failed to conduct a
search and advised the client that the property was unencumbered. The client paid the purchase
price. It later on turned out that the property was actually encumbered and title could not be
transferred. The client filed a suit and sought summary judgment. The court struck out the
advocates defence and granted summary judgment. On appeal, the Court of Appeal stated that in a
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claim for damages in negligence, any defendant who had denied negligence was entitled to
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unconditionally defend the suit.

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ATP 107-CONVEYANCING

CONVEYANCING AND OTHER BRANCHES OF LAW

1. Conveyancing and Land Law-Conveyancing law overlaps with land law. However, there is a
distinction in that land law deals with principles that define actual rights and interests that
can be enjoyed in the land. It is Law at rest. Conveyancing law is concerned with the
practical legal mechanisms by which those rights and interests are transferred from one
person to another. It is Law in motion.
2. Conveyancing and Contract Law-There’s also a relation between Conveyancing and Contract
law because interests in land give rise to contractual obligations e.g. a lease, mortgage or
charge.
3. Conveyancing and Equity-The law of Equity is also relevant to Conveyancing law and
practice in so far as equitable rights and remedies are concerned such as specific
performance, injunctions, rectification and rescission.
4. Conveyancing and Succession-Law of Succession is also necessary in dealing with
transactions involving personal representatives.
5. Conveyancing and Company Law-Company law in dealing with companies involved in
Conveyancing transactions.

SCOPE OF CONVEYANCING
The scope of Conveyancing covers the various procedures for certain land transactions.
It deals with practical issues such as how one negotiates and concludes a lease, mortgage,
charge, transfer or other transaction and how the relationship between the parties to the
transaction is determined.
Conveyancing therefore deals with various stages of a transaction including:
i. Preliminaries – the simple initial information you trade with a client
ii. Investigation of title – e.g. searches, examination of documents of title
iii. Documentation – the legal framing of documents; the art of drafting
iv. Contractual stage – negotiation of terms
v. Completion stage
Conveyancing also includes other procedural matters such as execution, attestation,
stamping and registration of documents; construction or interpretation of documents;
litigation e.g. where a transaction fails and parties resort to the court process for
determination and enforcement of their rights.

DEFENSIVE CONVEYANCING
This involves protecting the client, for instance, from negligence claims. Do not allow your
client to dictate you! Be on alert for any sort of fraud, for instance mortgage fraud. Try to
stop any criminal acts. Exercise caution.
See the following two cases Juma Muchemi v Waweru Gatonye HCCC No.853 of 2002 NBI
and Momanyi V Hatimy 2003 KLR 545 above.
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INFORMAL METHODS
There are instances where interest in property will pass without formal methods of
conveyancing being followed. E.g.
(a) Adverse Possession
Statutes of Limitation dictates if a party is in possession of property continually for a period
of 12 years and such possession is adversely exercised with the intention of excluding the
whole world from claiming an interest to the property, the court is under a duty to declare
the party the owner of that property and that the judgment is a judgment in rem.

(b) Proprietary Estoppel

If you represent to a party that the party can exercise such rights on your property to be
deemed an owner of the same and relying on your representation that party acts to his
detriment, the court is under a duty through the principle of proprietary estoppel to declare
the party as the owner of the property.
See Teng Hwan v Swee Chuong [1992] 1 WLR 11,

Teng Hwan v Swee Chuong [1992] 1 WLR 11,

Two brothers bought land jointly in their names and registered them in their father’s name as a trustee.
The defendant began construction on the plot 3 years later. The plaintiff encouraged him to continue
and consented to the construction. He also indicated that he would surrender his interest to the
property defendant in exchange for a plot that did not exist. The defendant completed the construction
and took full possession. When the father died, the plaintiff moved the court and sought his share of the
property or money in lieu thereof.

The defendant counter claimed for a declaration as the sole owner using the shield as proprietary
estoppel. The Privy Council held that the plaintiff was estopped from denying the defendant title and
ownership to the entire property even though the arrangement was from the word go unenforceable,
as there was no consideration.

(c) Special Power of Attorney

There are possibilities of conveyancing unregistered property through a special power of
attorney which you register.
The power of attorney would states that “ In the case City Council decides to give title, you
have the power to get title to the property.

(d) Letter of Allotment

You can also transfer property based on a letter of allotment on conditions that:
i. The property exists
ii. The allottee has satisfied the conditions in the allotment by making sure there is a
correspondence file for that piece of land in the land’s registry.

DUTIES OF A CONVEYANCER GENERALLY

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Advising clients on the buying and selling process and the effect of transferring an interest in
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land
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Investigation of title
Drafting the conveyance document with sale details, offers, leases, mortgages and transfers
Liasing with mortgagees, lenders, estate agents and advocates
Paying taxes e.g. stamp duty, land rent, VAT and land rates
Keeping records of payments and finally preparing a completion statement
Perfecting the documentation including proper execution, completion and
Registration

(a) Acting For Lessor

Draw the lease. This will require:
i. Details and proper instructions as the lease must reflect the precise intention of the
lessor and also the particulars of the property;
ii. Appropriate plans
(b) Acting for Lesee
Investigate lessor’s title, even though this is implied.
Approve the draft lease- you will need to peruse the lease and see that your client got what
he bargained for, and share this information with your client.

NB: All these the conveyance must act diligently and advise the client appropriately. See Sykes v.
Midlands Bank Co-

Sykes v. Midlands Bank Co-

The duty is that you do not explain verbatim to the client but you understand as a lawyer and expert on the
covenants. In this case it was held that an unusual clause which affected the tenants interest ought to have
been brought to the attention of the tenant by his lawyer. The lawyer was held liable for negligence.

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ATP 107-CONVEYANCING

LECTURE 2: FRIDAY 12 FEBRUARY 2016- MORNING SESSION (LECTURE HALL

A)

TOPIC 2: HISTORY OF CONVEYANCING

England From 1535-1925
Conveyancing in Kenya is drawn from English law.
The earliest and most important form of conveyance was the feoffment
Feoffment - this was an assurance note made by the feoffor (owner of land) that he had
given his right over an estate to the feofee. The assurance note was accompanied with a
formal public delivery of possession in presence of witnesses mainly feudal lords.
The law the recognized facts of leases, assignments, exchanges and partitions through a
number of enactments, most importantly the 1925 Law of Property Act which was intended
to simplify conveyancing. It established a formal register and also introduced state
indemnity to those deprived of their land or title.
The following is the chronological legislations in England
i. 1535 Statues of Uses;
ii. 1936 Statute of Enrolments;
iii. 1677 Statute of Frauds- introduced the requirements of writing, execution and
attestation;
iv. 1845 Real property Act;
v. 1875 Land transfer Act; and
vi. 1874 Vendors and Purchasers Act.

SUMMARY - ENGLAND 1535 TO 1925

England from 1535 to 1925

In 1051 AD, conveyancing was effected by means of a feoffment.

Feoffment - a document noting that one particular lord was transferring his interest in land to another
lord. This was never complete until a public ceremony known as the “delivery of seisine” in the presence
of all the lords follows by delivery of the physical possession e.g. by way of a taft of grass being
transmitted. Lord of Manor witnesses the ceremony completing the process.

In 1535 a statute was enacted called the Statute of Users. This was to forestall what the crown
and lords deemed to be loss of their earnings. There still was no registration and delivery of
possession was no longer mandatory.

1677-1925
Real Property Act, 1845
Land Transfer Act, 1875 (amended in 1897)
Vendor and Purchasers Act, 1874
Registration was not strict. Up to the turn of the 20th Century, it was easy to know who owned what
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property.
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1925
Law of Property Act. It was at this time that folios were introduced.
Simplification of conveyancing was necessary.
Surrenders, releases, partitions and various interests.

The relevant statutes were transplanted into the Registered land Act 1963, which is an
imitation of the UK Law of Property Act 1925.

Relevant Statues enacted in Kenya

1901 Registration of Documents Act:

S4 requires that documents conferring property interest to be registered within a month of
its making to ensure its availability in evidence.
Registration does not guarantee title, but is merely evidence of the occurrence of a
transaction.

1908 Land Titles Act:

Intended to help deal with haphazard deserted parcels of the coastal strip.
It does not guarantee title, but unlike the RDA is not defunct vis-à-vis conveyancing.
Titles registered under the LTA are not governed by grants.

1915 Governments Land Act:

Enacted to deal with conveyancing and land titled in the interior hinterland.
Introduced a more systematic approach to registration and provided for Deed Plans for all
parcels of land to be registered.
The title number under the GLA is usually the last indenture of conveyance (freeholds) or
assignment (leaseholds).

1920 Registration of Titles Act:

Provides for registration of and guarantee of titles.
It attempted to make conveyancing simple by introducing statutory conveyancing though
this was not mandatory.
Title under the RTA is either Grant or Certificate of Title or a Lease.

1963 Registered Land Act:

Intended not only for a further and better provision for registration of title to land but also
the simplification of conveyancing and facilitation of a cheapened mode of transfer of
interest in land.
Unlike the RTA is made the use of statutory conveyancing forms mandatory (S108) and are
found in the first schedule of the Act.
Title document under the RLA is a Title Deed/Land Certificate (for absolute proprietorship)
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or Certificate of Lease (for leaseholds) or Certificate of Sectional Property if it is a property

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under the Sectional Properties Act.

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For the purposes of identification of the land parcel, the RLA got rid of Deed Plans and
instead introduced R.I.M’s which was presumably simpler and more straight forward.
Note that it is not compulsory to convert land registered under the RTA, GLA or LTA to the
RLA unless one intends to bring the same under the Sectional Properties Act.

SUMMARY - KENYA 1900 THROUGH 1978 TO TODAY

1.Registration of Documents Act, 1901 (Cap 285)

Provided for the registration of deeds conferring only interests in property.
There was only one registry.
The documents under the RDA did not prove title, only possession did.
It was compulsory to register all documents relating to land.
Any document that conferred, limited or extinguished rights, titles or interests in land was to be
registered.

2. Land Titles Act, 1908

Provided for registration of deeds and documents.
Originally applied to coastal land.
An absentee owner losing his land was curbed under this Act because the Recorder of Titles was
created.
The Recorder adjudicated disputes and on satisfaction that the land belonged to a particular
party, he granted a certificate to that person.
There still was no proper way of registration of title.

3.Government Land Act, (Cap 280)

Introduction of deed plans scientifically created by surveyors
Provided that any conveyance of an interest in land had to be by deed under seal.
The Act was enacted to make further and better provisions for regulating the leasing and other
dispositions of Government Land and other related issues.
Before being repealed, the Act governed all freeholds and leasehold interests granted by the
Government prior to 1920, with the exception of leaseholds converted to 999 years or to
freeholds under the RTA.

4. Registration of Titles Act, 1920, Cap 282

All successfully claimed plots were registered under this Act.
It also introduced conveyancing by statutory form.
It was enacted primarily for the purpose of improving the issuance of titles to land as well as
regulating transactions in the same.

5.Registration of Lands Act, 1963 (Cap 300)

Introduced title deeds and a register showing ownership, sections and encumbrances.
It borrowed heavily from the English Land Property Act and prescribed simple forms for
registration and transfer of land.
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COMPARATIVE TERMINOLOGY
GLA and LTA RTA RLA
Title Documents Title Deeds-GLA Grant Land Certificate
Certificate of ownership-LTA Certificate of Title Title Deed
Conveyances-GLA Lease Certificate of Lease
Lease
Sale Conveyance (freehold) Transfer Transfer of Lease
Assignment (Leasehold) Transfer of Land
Interest Leasehold Leasehold Leasehold
Freehold Freehold Freehold
Securities over land Legal Mortgage/Charge Legal Charge Legal Charge
Equitable Mortgage Equitable Charge
Execution of mortgages and charges By all parties By all parties By all parties
Execution of conveyances assignments By transferor and transferee or assignor By all parties By transferor and transferee
and transfers and assignee
Commissioner of land consent and Leasehold- required Leasehold- required Leasehold- required
consent of head lessor
Land rent clearance certificate Leasehold-required Leasehold-required Leasehold-required
Rates clearance certificate Required for conveyance and assignment Required for transfer Required for transfer
LCB consent Required for agricultural land Required for agricultural Required for
land agricultural land
Encumbrances Mortgage or Charge Charge Charge
Release of securities Re-conveyance of mortgage (freehold) Discharge of Charge Discharge of Charge
Re-assignment of mortgage-leasehold
Title documents required at lands office Deeds NOT required. Grant Land Certificate
during registration of instrument Last conveyance ordinarily nowadays Certificate of Title Title Deed or Certificate of Lease

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required NOT required as a matter of law but

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required as a matter of practice

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Servitudes Profit a prendre Profits Profits

Easements Easements Easements
Restrictive covenants Restrictive covenants Restrictive covenants
Restraints Statutory Caveat Statutory Caveat Caution
Prohibition Prohibition Inhibition
Registrar’s Caveat Registrar’s Caveat Restriction
Other Rights Income tax Caveat Income tax Caveat Income tax
Restriction

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New Land Laws in Kenya

The Land Act No 6 of 2012

Revised, consolidated and rationalised previous land laws so as to provide for the sustainable
administration and management of land and land based resources, and other connected
purposes.
It repealed the following enactments:
i. Way leaves Act Cap 292; and
ii. Land acquisition Act Cap 295

By section 3 of the Act it shall apply to:

i. Public land under Article 62 of the Constitution;
ii. Private land under Article 64 of the Constitution; and
iii. Community land under Article 63 of the Constitution and any other written law relating
to community land.

It recognizes four categories of tenure

i. Freehold;
ii. Leasehold;
iii. Customary land rights; and
iv. Partial interest defined in the Act or any other law.

Title to land may be acquired through

i. Compulsory acquisition;
ii. Settlement programmes;
iii. Allocation’
iv. Prescription;
v. Land adjudication;
vi. Long term leases exceeding twenty years;
vii. Transfers; and
viii. Transmissions.

Public land may be allocated by way of:

i. Application to a target group;
ii. Public drawing of lots;
iii. Public auction to highest bidder;
iv. Public notice of tender; or
v. Public request for proposal.

Expired leased that revert back to the government will be offered to the immediate past holder
provided they are Kenyan citizens and the land is not required for public purposes.

Land Registration Act No 3 of 2012

Revises, consolidates and rationalises the registration of titles to land, gives effect to the
principles and objects of devolved government in land registration and related purposes.
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It repeals the following Acts:

i. The Indian Transfer of Property Act 1882
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ii. The GLA

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iii. The RTA

iv. The LTA; and
v. The RLA.
Title documents for freehold are referred to as Certificates of Title and for leasehold Certificate
of Lease.
it provides that no part of land in a register shall be transferred unless first subdivided and duly
registered.
No long term leases over apartments, flats, maisonettes, town houses or offices shall be
registered unless properly geo-referenced and approved by statutory body responsible for
survey.
Titles already issued under the RLA and RTA shall be deemed to be issued under the LRA and
the Registrar will in due course issue new titles in new prescribed form.
Titles under the GLA and LTA are to be examined by the Registrar.

SUMMARY – NEW LAND LEGISLATION AFTER CONSTITUTION 2010

1.CONSTITUTION, 2010
Chapter V specifically deals with matters of land and land tenure, dividing the tenures into
public, private and communal
Art 40 – property rights
Art 60 – principles of land policy
Art 65 – reduction of interminable long tenure of 999 years to 99 years for foreigners
Art 67 - National Land Commission
Art 162 – Environment and Land Court, with the status of High Court.

2.LAND ACT, 2012

Gives effect to Art 68 of the Constitution, to revise, consolidate and rationalize land laws in
Kenya.
The Act expounds on “land” to give it a more encompassing meaning, rather than previous
confusion (Art 260).
Conversion of public land to private land requires parliamentary approval.
Repealed the Land Acquisition Act (Cap 295) and the Way leaves Act (Cap 292).
Acquisition of land through:
i. Allocation
ii. Settlement Programs
iii. Land Adjudication process
iv. Transmission
v. Compulsory acquisition
vi. Transfers
vii. Long terms leases exceeding 21 years created out of private land or other manner
prescribed by an Act
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3.LAND REGISTRATION ACT, 2012

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Object of the Act is to revise, consolidate and rationalize the legislations relating to the

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registration of title to land, to give effect to the principles and objects of devolved
government in land registration.
Repealed the Indian Transfer of Property Act, Government Lands Act, and Registration of
Titles Act, the Land Titles Act and the Registered Land Act.
Simplified the whole process of land adjudication.

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LECTURE 3: FRIDAY 19 FEBRUARY-4 MARCH 2016- MORNING SESSION (LECTURE

HALL A)

TOPIC 3: DISPOSITION IN LAND

As it has already been noted, conveyancing is essentially the law relating to the creation and
transfer of estates and interests in land.
The unique character of conveyancing (as contrasted from disposition of other chattels) flows
from the nature of land. There are three differences between buying land and any other chattel
e.g. a book.
i. The first difference between the two transactions lies in the nature of what is being
sold. A vendor cannot ‘own’ land in the same way that he can ‘own’ a book, that is to
say that he cannot own land absolutely, but only have an estate in it.
ii. A second difference lies in the method of transfer of estates in land. A book is normally
bought by taking possession and paying the purchase price. This is not a suitable
method of transfer of land. Because the transfer or creation of a legal estate or interest
must be by a deed or contract.
iii. A third difference between buying a book and buying land is in the proof of ownership
provided. A purchaser buying a book normally neither neither demands nor receives any
proof from the shop that they do own the book; he assumes that they do from their
possession of it. Such an assumption would be extremely foolish in the case of land.
One cannot really be in possession of land in quite the same way that one can be in
possession of a book. One can be in occupation of it but that does not necessarily
suggest that the occupant is the owner of a freehold or leasehold estate. He could be a
mortgagee, a tenant under a weekly tenancy, a licensee, or even a squatter
The starting point of a discussion on disposition in land, therefore, should be a clear exposition
of the legal understanding of land.

1. DEFINITION OF LAND
What is the legal definition of land and the exceptions there to?
There are two approaches namely
(a) Common Law
(b) Constitutional

A. COMMON LAW APPROACHES TO DEFINITION

Land incorporates more than something physical (the soil, the grass, the tress and the buildings).
The definition of land including both corporeal and incorporeal hereditament.
A hereditament is a right that is heritable that is something that can be passed by way of
descent to heirs.
In other words, it is the nature of right involved in the ownership of land.e.g Land includes
ownership of a house (corporeal hereditament) and a right of way over someone else’s house
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(incorporeal hereditament).
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For the property student and lawyer, the word ‘land’ has an extended and complex meaning.
This meaning is usually expressed by reference to two Latin maxims. (two approaches)

1. The first is Cuius est solum eius est usque ad coelum et ad inferos meaning he who
owns the land owns everything extending to the very heavens and to the depths of the
earth. The application of this maxim has however, been substantially qualified (it has
exceptions) in contemporary jurisprudence e.g.
i. For instance, a land owner’s right in the airspace extends only to such a height
as is reasonably necessary for the ordinary use and enjoyment of the land. In
other words the qualification is necessitated by the need to balance the rights of
an owner to enjoy the land against the rights of the public to take advantage of
all that science now offers in the use of airspace. This means that beyond height
is necessary for the ordinary use of land, the land owner has no superior right
than any other member of the public .This explains why it is a defence for an
aircraft to fly at such a height which is reasonable under certain circumstances
over someone else’s land. However the qualification of the maxim does not
permit interference with the legitimate rights of the land owner.
ii. Secondly, the right to extract water is controlled by both statutes and common
law. The Water Act for vests water resources in the State. As a general rule, the
right to extract the water resources vests with the Cabinet Secretary in charge
of water resources, unless the resource is alienated. As a matter of fact the
Water Act is categorical that a conveyance of itself does not confer property
rights in water resources.
iii. In terms of water resource use, the EMCA limits the manner in which landowner
can use a water resource by creating water pollution and related crimes. These
include prohibiting discharge of effluent into an unlicensed sewerage system, as
well as prohibiting discharge of dangerous materials, substances or oil into
water. And hence anyone can enforce a right to clean and healthy environment
against the land owner.
iv. The Constitution 2010 bolsters the foregoing provisions by defining public land
to include water resources, such land vest in and are held by the national
government in trust for the people of Kenya and administered on behalf of the
Kenyan people by the National Land Commission (NLC).
v. Over time the common law principles that limit the applicability of the cujus est
solum doctrine have been developed in relation to water resource use. For
instances, water percolating underneath the land and not contained in a defined
channel, is not capable of ownership until such moment as it is appropriated
when it becomes the property of the person appropriating it.
vi. Finally whereas the cujus est solum maxim states that a landowner owns
everything to the centre of the earth, in terms of article 62 (3) of the
Constitution ownership of minerals is vested in the national government.

2. The Second maxim is quicquid plantatur solo solo cedit –this approach to defining land
is by relating land to what is attached to it. It means “the surface, buildings or parts of a
building and whatever is attached to the land becomes part of the land. This approach
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also has limitations and exceptions. It raises complex legal questions as to what
constitutes fixtures thus part of realty, and those which are not thus remaining
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personalty/fittings. Two tests have been consequently been employed in distinguishing

fixtures from fittings
i. The first test relates to the degree of annexation. Fixtures have been described
as comprising those material objects which as a matter of law, merge with the
freehold either by reason of their physical bond with existing land or by reason
of their highly purposive juxtaposition with such land. In other words if an
object is annexed to the land prima facie it is fixture. See the following cases.

Mukuru Munge v Gilead Mwanyasi [2006] eKLR

Where the Judge stated that it is a time honoured principle o f real property that land includes fixtures
there on. That principle is adequately summarized in the latin maxim –quicquid plantatur solo,solo
cedit,which means that whatever is affixed to the soil belongs to the soil.

Compare this three cases

Holland vs Hodgson (1872) LR 7 CP 328

Spinning looms bolted to the floor of a factory attached to the land other than by their own weight was
held to be a fixture.
Hulme vs. Brigham
A heavy printing press which stood on the floor without any attachment other than the force of gravity
was held to be a fiiting
Chelsea Yacht & Boat Co. vs Pope [2001] 1 WLR 1941
A house boat moored to the bank and which moved up and down with the tide was held to be a fitting

ii. The Second test for distinguishing a fixture from a fitting is whether a chattel
has been affixed to the land for the better enjoyment of the object as a chattel
or for a more convenient use of the land; this can also raise some confusion
because an object may constitute a fixture in one case but a chattel in another.
See the following cases

Leigh vs Taylor [1902] AC 157

Tapestrie nailed onto a wall were held not to be fixtures.

Re Whaley [1908] 1 Ch.615

Tapestrie nailed onto the wall were held to be fixtures

Elistone Ltd vs Morris [1977] 1 WLR 687

The House of Lords has since confirmed that what is of primary importance is the intention involved.

NB: It is important to distinguish whether the object was intended for the use or enjoyment of
the land, in which case it passes as a fixture or for the more convenient use of the object itself,
in which case it passes as a fitting.
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B. CONSTITUTION OF KENYA 2010 DEFINITION

With the foregoing common law principles in mind various statutes have therefore attempted to
define land.
Article 260 of the Constitution of Kenya defines land to include
a) The surface of the earth and the subsurface rock.
b) Any body of water on or under the surface
c) Marine waters in the territorial sea and exclusive economic zone.
d) Natural resources completely contained on or under the surface and
e) The air space above the surface
This definition has been adopted by
i. The Land Act No.6 of 2012
ii. The Land Registration Act No.3 of 2012.
iii. The Environment and Land Court Act No.19 of 2011

Thus whereas the definition of land under previous Constitutional era in Kenya were varied
and often inconsistent with each other, the CoK 2010 now defines land with some element of
certainty.

2. INTEREST IN LAND

Earlier in the definition Conveyancing was stated to be the transfer of an interest in property.
Abbey & Richards definition – the process by which legal title to property is transferred.
The word conveyancing derives its meaning from this very definition. It is basically to convey.
Documents used to convey interest from one party to another. (Voluntary)
Conveyancing is concerned with the legal mechanisms whereby the ownership of land or of an
interest in land is transferred from one person to another.’
When one purchases a property e,g land you are not buying the land because all the land belong
to the state what you are buying is the interest in that land.
Rights in or over land are different from mere contractual rights; land rights affect persons other
than the parties who created the rights. This is what defines “proprietary” nature of land law
rights.
Proprietary right can “run” with the land and can confer benefits and burdens on whomsoever
comes to own the land.
Central to the idea of ‘property’ is that ‘property’ in a resource is capable of calibration, rather
than being absolute ,from a maximum value to a minimum value; at any particular time, it is
possible to “measure the quantum of property” which someone has in a particular resource.
For example a licensee has only a right of access to land, but the power to control access to land
and to ultimately exclude the licensee from the land remains with the owner of the land.
On the other hand a tenant or a transferee of title acquires “proprietary interest” in land.
It also means that to have ‘property’ in a resource may be consistent with the acquisition or
retention by others of ‘property’ in the same resource.
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The idea of a right essentially boils down to therefore to a statement about the quantum or
range of activities that a given society permits its members, individually or collectively either
serially or concurrently to execute.
Hence property law has always accommodated more than one proprietary interest in the same
piece of land.
The conceptual underpinning for this scheme have traditionally been identified as the doctrine
for this scheme have traditionally been identified as the doctrine of tenure and the doctrine of
estates
The doctrine of tenure was based on the notion that the ultimate title to all land was in the
crown and all tenures are referable to the original grant.
The doctrine enabled many different interests to be granted and harmoniously co-exist in the
one piece
Land laws in Kenya for instance are cognizant of this reality and they enable acquisition and
retention of ‘competing ‘and independent ‘property’ in one resource.
See for example Section 28 of the Land Registration Act 2012

28. Overriding interests.

Unless the contrary is expressed in the register, all registered land shall be subject to the
following overriding interests as may for the time being subsist and affect the same, without
their being noted on the register—
spousal rights over matrimonial property;
trusts including customary trusts ;
rights of way, rights of water and profits subsisting at the time of first registration under this
Act;
natural rights of light, air, water and support;
rights of compulsory acquisition, resumption, entry, search and user conferred by any other
written law;
leases or agreements for leases for a term not exceeding two years, periodic tenancies and
indeterminate tenancies;
charges for unpaid rates and other funds which, without reference to registration under this
Act, are expressly declared by any written law to be a charge upon land;
rights acquired or in process of being acquired by virtue of any written law relating to the
limitation of actions or by prescription;
electric supply lines, telephone and telegraph lines or poles, pipelines, aqueducts, canals,
weirs and dams erected, constructed or laid in pursuance or by virtue of any power
conferred by any written law; and
any other rights provided under any written law.
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See Republic Olum vs.Angugo and Others [1988] KLR 529

Republic Olum vs.Angugo and Others [1988] KLR 529
The Court interpreted the provisions of Section 23 (1) RTA (Repealed) that pursuant to
Section 23 (1) of the RTA (Repealed),the certificate of the Title was conclusive evidence that
the plaintiff were absolute and indefeasible owners of the land subject to
encumberances,easements and restrictions and conditions that may be endorsed on the
title.

The proprietor should be at liberty to alienate his interests in the property whether partially or
entirely, whether absolutely or conditionally. This remains a right attendant to an absolute
estate and there should be no restrained put in the exercise of this power.
Even in a customary tenure this doctrine still remain true; the customary land tenure is
therefore described the tenure of “interlocking rights over a single piece of communal land; that
a customary authority may exercise broad communal rights while groups or individuals users
may be granted specific rights of access and use.
See also Section 24 and 25 of the Land Act 2012

24. Interest conferred by registration.

Subject to this Act—

(a) the registration of a person as the proprietor of land shall vest in that person the absolute
ownership of that land together with all rights and privileges belonging or appurtenant thereto;
and
(b) the registration of a person as the proprietor of a lease shall vest in that person the leasehold
interest described in the lease, together with all implied and expressed rights and privileges
belonging or appurtenant thereto and subject to all implied or expressed agreements, liabilities
or incidents of the lease.

25. Rights of a proprietor.

1. The rights of a proprietor, whether acquired on first registration or subsequently for valuable
consideration or by an order of court, shall not be liable to be defeated except as provided in
this Act, and shall be held by the proprietor, together with all privileges and appurtenances
belonging thereto, free from all other interests and claims whatsoever, but subject—
(a) to the leases, charges and other encumbrances and to the conditions and restrictions, if
any, shown in the register; and
(b) to such liabilities, rights and interests as affect the same and are declared by section 28
not to require noting on the register, unless the contrary is expressed in the register.
2. Nothing in this section shall be taken to relieve a proprietor from any duty or obligation to
which the person is subject to as a trustee.

Under Section 25 of the Land Registration Act 2012 it is the position that the powers so
conferred should not be liable to be defeated in any way except as may be provided in the Act
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itself.
The section further provides that such powers are to be held together with the entire privileges
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attendant thereto and free from all other interests and claims of whatever nature.

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The effect of Section 25 of the Land Registration Act is to preclude any limitations on the powers
of the absolute proprietor which are emanating from outside the provisions of the Act.
The general rule is that rights acquired, powers conferred cannot be defeated by looking to
other external factors.
The only exception to this general rule is those restraints that the Act itself provides for in the
enjoyment of the rights acquired under absolute proprietorship.
The Act is not short on those restraints and there are provisions that can be lodged against the
title with the effect of temporary restraining the exercise of those powers or enjoyment of rights
that absolute proprietorship brings t o the proprietor, it is possible to have cautions registered
against the title for reasons that would have to be acceptable in the accordance with the Act.
They operate in the same way as in the fee simple estate, the circumstances that justify their
acceptance for registration of title and the conditions under which they will remain in force are
all similar to the conditions we have drawn in the Fee Simple Estate.
In theory therefore, the owner of an absolute estate has no reason to look over his shoulders
because there is no one above that threatens or supervises the conduct of such an honour in the
course of his ownership of this kind of Estate.
The leading authority in interpretation is that first registration extinguishes all customary rights
and cannot be cancelled on any grounds whatsoever is exemplified by Obiero v. Opiyo [1972]
E.A.227

Obiero v. Opiyo [1972] E.A.227

The plaintiff had been registered as the absolute proprietor of the title in question in 1968 and in the
register no encumbrances were noted. The defendants who were sons of the defendant with the co-
wives conceded that they had always been in possession of the suit property and they based their
ownership purely under customary law.

In a bid to bolster t heir case they argued that they had always worked the land since time immemorial
and argued that the plaintiff the first wife registration in their view was obtained by way of fraud to the
extent that the plaintiff never revealed their interest during the registration process.

That sort of argument did not persuade the court and the court in its findings held that even if the
registration had been procured fraudulently, the plaintiff’s title of first registration was indefeasible and
the plaintiff’s title was subject to no encumbrances as the register reflected none and accordingly the
title was free from all interests and claims and finally the court found that the rights of occupation
inherent in the defendants which in any case arose under customary law were not overriding interests
within S.30 of the RLA and the court further held that such a right of occupation had been extinguished
upon the first registration with the plaintiff emerging as the absolute proprietor of the suit property and
in granting t he plaintiff the relief sought i.e. damages for trespass and a permanent injunction to
restrain the defendants from continued trespass the Judge had this to say “rights arising under
customary law are not among the interests listed in S. 30 of the Act as over-riding interests.

Had the legislature intended that the rights of a registered proprietor were to be subject to the rights of
any person under customary law, nothing could have been easier than for it to say so.”
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There are subsequent decisions that reflect the general trend See also the case of Esiroyo v.
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Esiroyo & Another [1973] E.A. 388

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Esiroyo v. Esiroyo & Another [1973] E.A. 388

The judge relied on the judgment of Obiero case with the result that the registered proprietor was
allowed to evict his sons from land that was registered under him as the absolute proprietor.

This case arose after Esiroyo had a bitter disagreement with his sons and threatened to disinherit them
from the land. The relevant customary law was Luhya customary law regarding land tenure and there
was evidence called to prove that under that system of law that they were entitled to a share. The
customary law did not carry any favour and the court proceeded to allow the old Esiroyo to preclude his
sons from having their share of the family land although the sons had proved entitlement to that law
under the relevant customary law.

See also Ambale v. Masolia (unreported 54 of 1976)

Ambale v. Masolia (unreported 54 of 1976)

The Plaintiff in this case alleged that the land in question belonged to him but had been registered in
the name of the Defendant through an act of fraud. He argued that he was entitled to that property
under the applicable customary law which said gave him the right to that right.

Unfortunately this was first registration and in determining this issue the court was emphatic that a
first registration cannot be impeached for fraud and that customary rights are not overriding
interests within the meaning of the Act and cannot avail in favour of the plaintiff. The case failed.

Due to high cases of land fraud where people would ran to fraudulently register land that don’t
belong to them the Constitution has corrected this through Article 40 (6) which enshrines
property rights but the rights do not extend to any property that has been found to have been
unlawfully acquired.

RIGHTS AND INTEREST IN LAND

Proprietary rights refer to either an estate in land or an interest in land.
(a) An Estate in Land-confers a right to use and control land for a “slice of time”. An estate
in land can be in the nature of fee simple, freehold, leasehold or a fee tail.
(b) Interest in Land-are proprietary rights that enable a person to enjoy the estate of
another.
i. They include the right of way over someone else’s land (This is referred to an
Easement.
ii. The right to prevent an owner of land from carrying on some specific on his own
land (This right are called Restrictive covenant- Restrictive covenants impose
significant limitations upon the manner in which an owner may use land. There
may be limitations as to the height, composition, size or external features of a
building on the land. );
iii. The right of entry into another person’s land to do some specific act; such as to
pick the soil in that land (Profit Aprendre).
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Proprietary rights operate outside the normal concepts of privity of contract; the law does not
permit the parties to produce novel proprietary rights.
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CLASSIFICATION OF RIGHTS & INTEREST IN LAND

At common law land rights and interests are related that are broadly divided in 3 categories
i. Estates
ii. Servitudes
iii. Encumbrances
When you are looking at rights you are actually looking at the Estate in land

ESTATES
This is closely related but not similar to the doctrine of tenure.
Estates relate to interests in land which are projected on the plane of time and consequently are
capable of being quantified in terms of duration.
Tenure on the other hand refers to a set of conditions upon which an estate or interest in land
may be held so that with respect to an Estate the relevant question would be for how long?
Where in tenure the relevant question is for how much?
In terms of whatever the conditions may be. In a sense the doctrine of tenure is preoccupied
with the quantification of interest in land that one may hold regardless of their nature. Common
law knows of a number of sub-division and divides Estates into further sub categories.
But what then are the interests that one can own and transfer in land? In this regard, it is
important to remember that estate or interest in land is divided into two classes
i. Freehold
ii. Leasehold.

1. Freehold
Freehold refers to the right to use and enjoy the land for the duration of the grantee
and that of his heirs and successors
This right is known as a “fee simple”.
A freehold is freely alienable (transferable) during the life of the estate owner by way of
(a) Gift
(b) Sale
(c) Adverse possession
(d) On his death by way of will or in accordance with the rules of intestacy
Each new estate owner is then entitled to enjoy the land for the duration of his life and
that of his heirs and successors.
Such that whereas, a freehold is a description of ownership for a limited duration as any
estate ,the way in which the duration of the estate is defined and its free alienability
means that in most respects ,the freehold is equivalent to permanent ownership of
land.
Each freehold owner has within his purview the power to transfer the estate to another
and considering that the duration of the estate supersedes the life of the current owner,
freeholds can exist for generations.
In the fullness of time when no more heirs or successors exist the non-enduring nature
of freeholds is revealed when the land reverts to the government as the absolute
owner.
In instances where the holder of freehold dies leaving no will and no next of kin to
inherit the land under intestacy, the estate will have run its full hog and the land reverts
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to the Government.
The freehold estates are the fee simple, fee tail, life estate and estate pur autre vie.
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In the case of the fee simple and the fee tail, the word “fee” denotes that the estate is
an estate of inheritance, i.e. an estate which, on the death of the tenant is capable of
descending to his heir. It also means that the estate is one which might continue
forever.
The words “simple” and “tail” distinguished the classes of heirs who could inherit.
a) Fee Simple descended to the heirs general, including collaterals.
A fee simple was originally an estate which endured for so long as the
original tenant or any of his heirs (blood relations, and their heirs, and so
on) survived. Thus at first a fee simple would terminate if the original tenant
died without leaving any descendants or collateral blood relations (e.g.
brothers or cousins), even if before his death the land had been conveyed to
another tenant who was still alive.
b) Fee Tail descended to heirs special, i.e. to lineal descendants only.
A fee tail estate (or entailed interest) is an estate which lasts for as long the
original grantee or his lineal descendants survive. It could be limited to male
or female descendants. It was designed to keep the land within the family.
Thus if the original tenant died leaving no relatives except a brother, a fee
simple would continue, but a fee tail would come to an end.
A life estate on the other hand, is not a fee. It is not an estate of inheritance and it
cannot continue for ever.
On the death of the tenant an ordinary life estate determines, and an estate pur autre
vie does not descend to the tenant’s heir, but passes under the special rules of
occupancy.
Life estates are sometimes called “mere freeholds” or simply “freeholds”, as opposed to
“freeholds of inheritance”.
Under the Land Registration Act sections 24 and 25 a freehold interest is known as an
absolute title. The GLA is also capable of conferring a freehold interest.

2. Leasehold
Essentially the term leasehold refers to the bundle of rights that are contained in a
lease.
The concept refers to the quantum of interests inherent in a lease.
A lease generally means the transaction which confers a leasehold interest.
A leasehold interest is a fixed period estate and accordingly can never be freehold.
A leasehold estate is an estate for a fixed term of years. Leaseholds have long been
denominated “estates less than freehold”, and in theory they are inferior. There are
various forms of leasehold estates, their distinguishing characteristic, in contrast with
freehold estates, being that their maximum duration is fixed in time.
See Section 2 of the Land Act No.6 of 2012

Section 2 of Land Act No.6 of 2012

“lease” means the grant, with or without consideration, by the proprietor of land of the right to the
exclusive possession of his or her land, and includes the right so granted and the instrument granting it, and
also includes a sublease but does not include an agreement for lease;
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“lessee” means a person to whom a lease is granted and includes a person who has accepted a transfer or
assignment of a lease;
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“lessor” means a person by whom a lease is granted and includes a person who has accepted the transfer or
assignment of the reversion of a lease;

For a lease to be valid it must have 4 Essential characteristics

1. Exclusive Possession
The tenant must acquire the right of exclusive possession to the exclusion of the exclusion of the
landlord and all persons claiming through him.
See these two cases

London & North Western Rail Co. vs Buckmaster

However this does not mean that where a person is let into exclusive possession he necessarily becomes
a tenant. As a matter of fact such a person only acquired the personal privilege of occupation in the
nature of a licence, which may be revoked pursuant to any implied or express term of the grant.

Runda Coffee Estates vs Ujagar Singh [1966] EA 564

The expenditure of money by a person on another’s land in expectation, by reason of a representation
made by the owner of the land, of being allowed to occupy that land, gives rise to estoppels precluding
the owner from giving any evidence of an act which would terminate that occupation except in
accordance with representation.

The right to continue in occupation, however creates no title in the land and the right is co-extensive
with and dependent upon a clear and unequivocal representation.

2. Relate to Defined Premises/Interest

The grant of a lease must pertain to a definite interest in land which is capable of being the
subject of an assignment.

3. Pertain to a Definite Period
There can be no lease unless the property in question is defined or capable of being defined.
See Heptulla Brothers Ltd vs Jambhai Jeshangbhai Thakore [1957] EA 358

Heptulla Brothers Ltd vs Jambhai Jeshangbhai Thakore [1957] EA 358

The basic issue was whether ,in view of the terms of the document, which purported to be registrable
lease, the appellants were tenants or licensees in respect of that part of the shop, which they occupied
.The Court held that ‘No tenancy was ever created by or in reference to the document because the
premises intented to be let could never be ascertained with sufficient precision.

4. Pertain to a Period though not Ascertained is capable of being Ascertained

The period of the lease must be defined or capable of being defined.
The ultimate date of expiry of the lease must be capable of being predicted right from the start
of the lease.
The lease must have defined frontiers’ that is a beginning and an end.
See Harvey vs Pratt
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Harvey vs Pratt
Lord Denning stated thus “it has been settled law for all my time that, in order to have a valid
agreement for a lease, it is essential that it should appear, either in express terms or by reference to
some writing which would make it certain or by reasonable inference from the language used on
what day the term commences.

However where the date of commencement or date of expiry of the lease is not certain, the
transaction is void
See Lace vs. Chandler

Lace vs Chandler
For instance where a house was let for the “duration of the war” it was held that the agreement did not
give rise to a lease for want of certainty of the period intended.

Neither can a lease be granted ‘for as long as the tenant wishes to reside in the property nor
forever.
If the maximum duration of the lease is fixed then it does not matter whether the term is short
or long –a matter of days or ten of years.
It is worth noting that in its nature and origin, a lease was nothing more than a personal
permission to use land.
The Land Act has codified some of the essential requirements of a lease See Section 56 (a)

56. Power to lease land

Subject to the provisions of this Act, the owner of private land may—
(a) Lease that land or part of it to any person for a definite period or for the life of the lessor or of
the lessee or for a period which though indefinite, may be terminated by the lessor or the
lessee; and
(b) Subject the lease to any conditions that may be required by this Act or any other law or that the
lessor may impose.

OTHER DERIVATIVES OF LEASEHOLD INTEREST

1. SUB-LEASES
A land owner holding a freehold or lease hold interest from the government may grant a
sub-lease out of the leasehold or freehold interest.
Sub-leases may also be granted by third parties conveying some or all of the leased
property for a shorter term than that of the head lease.
Such sub-leases may be prohibited by the original owner or require written permission
from the owner.
The term of the lease granted by the purchaser under sub-lease is dependent on the
head lease
The concept of sub-lease is common with the ownership of flats and apartments.
The owners of the apartments constitute themselves into a management company
purposefully to manage the estate with such owners of the apartment being
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shareholders of the company.

Each shareholder is entitled to enjoy common amenities on an equal footing with other
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The management company is also charged with the mandate of purchasing reversionary
interest from the head lease to ensure that upon expiry of the sub-lease, the sub-lease
can be renewed in the name of the management company with shareholders thereof
continuing town common areas.

2. SECTIONAL TITLES
Sectional titles came about to allow a person to purchase a section of a building or
property.
It enables individual ownership of one dwelling unit within a multi-dwelling.
Unit owners have undivided ownership interest in the land and those portions of the
building are shared in common.

3. REMINDERS AND REVERSIONS

a) REMINDER
A reminder in property law is a future interest given to person (who is referred to as the
transferee or reminder man) that is capable of becoming possessory upon the natural
end of a prior estate created by the same instrument.
There are two types of reminders in property-law :
a) Vested
A reminder is vested if
i. The reminder is given to a presently existing and ascertained person
and
ii. It is not subject to a condition precedent
A vested reminder may be indefeasibly vested, meaning that it is certain to
become possessory in the future and cannot be divested.

b) Contingent
A reminder is contingent if one or more of the following is true
i. It is given to an unascertained or unborn person
ii. It is made contingent upon the occurrence of some event other
than the natural termination of the preceding estates.
b) REVERSION
The key difference between a reversion and a reminder is that a ‘reversion’ is held by
the grantor of the original conveyance whereas ‘reminder’ is used to refer to an interest
that would be a reversion, but is instead transferred to someone other than the grantor.
Similarly to reversions, reminders are usually created in conjunction with a life estate,
life estate pur autre vie or fee tail estate (or future interests that will eventually become
one of these estates).
See Section 69 (1) of Land Act-Unless a contrary intention is expressed, burden and
benefits of covenants over land run with reversion.

69. Burden and benefit of covenants to run with the reversion
1. If the interest held by the lessor under a lease, the reversion, ceases to be so held by the lessor,
whether by transfer, assignment, grant, operation of law or the lease, or from any other
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circumstance—
(a) the obligations imposed on the lessor by covenant of the lease run with the reversion and
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(b) the rights to the benefits of every covenant imposed on the lessee, that refers to the
subject matter of the lease, may be exercised and enforced by the person who is from time
to time entitled to the reversion against the person who is from time to time entitled to
the lease.
2. A person who becomes entitled to exercise a right to which subsection (1)(b) refers may exercise
the right even if it first became exercisable or accrued before the time at which that person
became so entitled unless before that time, the right was waived or the lessee was released from
the obligation to which the right relates.
3. If, in respect of a lease—
(a) there has been a division of the reversion into different parts so that different persons are
lessors of the different parts; or
(b) the lease has terminated in relation to the part of the land comprised in the lease, the
obligations referred to in subsection (1)(a) and the rights and remedies referred to in
subsection (1)(b) shall be apportioned, and to the extent required by that apportionment,
remain attached to each part of that reversion or to that part of the land in respect of
which the lease has not been terminated as the case may require and may be enforced by
the person entitled to enforce those obligations under subsection (1)(a) and exercised by
the person entitled to exercise those rights and remedies under subsection (1)(b).

If a lessor transfers or assigns a reversion, any payment by the lessee to the transferor
or assignor discharges the lessee to the extent of the payment unless the lessee had
actual notice of the transfer or assignment before making the payment.
Registration of a transfer of the reversion does not in itself constitute an actual notice to
the lessee of the transfer of the reversion
See Section 70 of the Land Act

70. Effect of payment by lessee to assignor of reversion

1. If a lessor has transferred or assigned the reversion, any payment by the lessee of any part of
the rent or of any other money due under the lease to the transferor or assignor shall discharge
the lessee to the extent of that payment unless the lessee had actual notice of the transfer or
assignment before making the payment.
2. Notwithstanding any other provision to the contrary in any other written law, the registration of
a transfer of the reversion shall not, for purposes of subsection (1), in itself, be an actual notice
to the lessee of the transfer.

OTHERS RIGHTS AND INTEREST

In addition to the above classes of estates or interests in land, other interests in land
which may form the subject of a conveyance are:
1. Mortgage or Charge
2. License
A license is a personal permission granted by a land owner to another person to occupy,
personally, for a consideration, the other’s land, and may be for a limited time or unlimited.
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However, a licence cannot amount to a lease.

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The difference between a lease and a licence is that a lease can be assigned while a licence
cannot.
See Runda Cofffee Estates v Ujagar Singh (1966) EA 564.

3. Easements
Easements include rights of way, rights to light and other similar rights.
Section 2 of the Land Act defines an easement as ‘means a non-possessory interest in another’s
land that allows the holder to use the land to a particular extent, to require the proprietor to
undertake an act relating to the land, or to restrict the proprietor’s use to a
particular extent, and shall not include a profit;
They to amount to overriding interests. They are basically rights in alieno solo, for instance,
where a person purchases land subject to easements, the person in the dominant tenement will
still have a right to pass over the servient tenement.

4. Profits a prendre
Profits a prendre is the right to go to the land of another person to pick up a product of the soil.
It confers a right to take part of the soil or produce of the servient tenement.
In this respect profits are to be distinguished from easements, which are essentially privileges
without profit. A profit is further distinguishable from an easement in that a profit may exist ‘in
gross’.
This means that the owner of the profit need not be the owner of any adjoining or neighbouring
land or indeed any land at all. There need not be a ‘dominant tenement’.

CATEGORIES OF LAND UNDER THE CONSTITUTION

See Article 61,62,63 and 64

61. Classification of land.

1. All land in Kenya belongs to the people of Kenya collectively as a nation, as communities and as
individuals.
2. Land in Kenya is classified as public, community or private.

62.Public Land
(1) Public land is—
(a) land which at the effective date was un-alienated government land as defined by an Act
of Parliament in force at the effective date;
(b) land lawfully held, used or occupied by any State organ, except any such land that is
occupied by the State organ as lessee under a private lease;
(c) land transferred to the State by way of sale, reversion or surrender;
(d) land in respect of which no individual or community ownership can be established by any
legal process;
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(e) land in respect of which no heir can be identified by any legal process;
(f) all minerals and mineral oils as defined by law;
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game reserves, water catchment areas, national parks, government animal sanctuaries,
and specially protected areas;
(h) all roads and thoroughfares provided for by an Act of Parliament;
(i) all rivers, lakes and other water bodies as defined by an Act of Parliament;
(j) the territorial sea, the exclusive economic zone and the sea bed;
(k) the continental shelf;
(l) all land between the high and low water marks;
(m) any land not classified as private or community land under this Constitution; and
(n) any other land declared to be public land by an Act of Parliament—
i. in force at the effective date; or
ii. enacted after the effective date.
(2) Public land shall vest in and be held by a county government in trust for the people resident in
the county, and shall be administered on their behalf by the National Land Commission, if it is
classified under—
(a) clause (1) (a), (c), (d) or (e); and (b) clause (1)
(b) other than land held, used or occupied by a national State organ.
(3) Public land classified under clause (1) (f) to (m) shall vest in and be held by the national
government in trust for the people of Kenya and shall be administered on their behalf by the
National Land Commission.
(4) Public land shall not be disposed of or otherwise used except in terms of an Act of Parliament
specifying the nature and terms of that disposal or use.
63.Community Land
(1) Community land shall vest in and be held by communities identified on the basis of ethnicity,
culture or similar community of interest.
(2) Community land consists of—
(a) land lawfully registered in the name of group representatives under the provisions of
any law;
(b) land lawfully transferred to a specific community by any process of law;
(c) any other land declared to be community land by an Act of Parliament; and
(d) land that is—
i. lawfully held, managed or used by specific communities as community forests,
grazing areas or shrines;
ii. ancestral lands and lands traditionally occupied by hunter-gatherer
communities; or
iii. lawfully held as trust land by the county governments, but not including any
public land held in trust by the county government under Article 62 (2).
(3) Any unregistered community land shall be held in trust by county governments on behalf of the
communities for which it is held.
(4) Community land shall not be disposed of or otherwise used except in terms of legislation
specifying the nature and extent of the rights of members of each community individually and
collectively.
(5) Parliament shall enact legislation to give effect to this Article.

64. Private Land

Private land consists of —
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(a) registered land held by any person under any freehold tenure;
(b) land held by any person under leasehold tenure; and
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(c) any other land declared private land under an Act of Parliament.

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CUSTOMARY LAND AND OVERRIDING INTERESTS

The land tenure system in Kenya can be classified as
(a) Customary tenure
(b) Modern tenure
(c) Public land tenure

Trust lands are what are called community land, but since we do not have community land yet,
trust land is still governed as trust lands.
Government land is now designated as public land, group ranches are community lands and
private lands are private lands.
This is found in the Kenya 2010 constitution and the Land Policy Sessional paper no. 3 2009.
Land that is neither community, private nor public land: No man land –

3.3.1 Categories of Land

56. Land in Kenya is currently designated as government land, trust land and private land.
57. This Policy designates all land in Kenya as Public Land, Community Land and Private Land.
58. The Government shall enact a “Land Act” to govern all categories of land.

Title to land may be acquired through

a. Compulsory acquisition;
b. Settlement programmes;
c. Allocation’
d. Prescription;
e. Land adjudication;
f. Long term leases exceeding twenty years;
g. Transfers; and
h. Transmissions.

Public land may be allocated by way of:

a. Application to a target group;
b. Public drawing of lots;
c. Public auction to highest bidder;
d. Public notice of tender; or
e. Public request for proposal.
f. Expired leased that revert back to the government will be offered to the immediate past
holder provided they are Kenyan citizens and the land is not required for public
purposes

Customary Land Tenure

Replacing customary land tenure with modern tenure system through the processes of
adjudication of individual rights has been slow and costly.
Customary land tenure remains the most wide spread and dominant tenure system in the
country
Characteristics of customary land tenure system:
1. Individuals or groups by virtue of their membership, belonging and identity in some social unit
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or political community have guaranteed rights of access to land or other natural resources.
2. Rights of control are vested in the political authority of the unit or community. This control is
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3. Nandi and Kipsigis land was controlled by the Kokwet elders.

OVER-RIDING INTEREST
See Section 28 of the-The Land Registration Act- there is over-riding interest in community and
trust land

IMPORTANCE OF LAND
1. Land is an economic resource that should be managed productively. It can be used as
collateral for charges.
2. Land is a significant resource and we should all have equitable access to it.
3. Land is a finite resource therefore we should use it sustainably.
4. Land is cultural heritage; we should therefore conserve it for future generations.
5. Land is linked to sovereignty: Sovereign control of land resources is an integral part of
political jurisdiction. Four aspects to sovereign control include: the location of radical
title, the power of compulsory acquisition, the scope of the regulatory power of the
state, and the system of derivation of title.
6. Land has political dimension or ramifications –
i. In the community for instance under the customary tenure where the members
have access to it but the control and management of the land lies on the
political group
ii. The citizenship question; belonging, identity accessibility to land on condition of
membership.
7. Land has a religious dimension through shrines, culture. E.g. Mecca
8. Land is the basis of citizenship and Identity
9. Land gives you a sense of belonging
10. Satisfies concurrent needs
11. Land provides rank and status in society
12. Land can also be used as collateral.
13. See Paragraph 29 of the National Land Policy (Sessional Paper No.3 of 2009)

29. Land is not just a commodity that can be traded in the market. It represents the following multiple
values which should be protected by both policy and law:
(a) Land is an economic resource that should be managed productively;
(b) Land is a significant resource to which members of society should have equitable access for
livelihood;
(c) Land is a finite resource that should be utilized sustainably; and
(d) Land is a cultural heritage which should be conserved for future generations.

14.See also Roger Yigger and Norman miller – say that fever grips Kenyans when they talk
about land. It brings together the traditional and the modern person. It represents
security, opportunity and welfare system to look after you when everything is gone. It
provides survival opportunities.

The Negative Effects of Land

1. Land rights can be used to divide people
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2. Land rights bring up classism

3. They cause exclusion
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THE GENERAL ROLE OF THE CONVEYANCER

In order for conveyancing to be done properly, it is essential that it be done by an advocate(s).
Apparently, the conveyancing practice has normally been conducted to date by advocates acting
for the vendor and purchaser respectively.
Indeed, Advocates enjoy a monopolistic control of conveyancing. As such, there is a need for
high standards of competence and ethical conduct.
Accordingly, any advocate who is involved in conveyancing is charge with, but not limited, to the
following duties/obligations:

DUTIES OF ADVOCATES IN CONVEYANCING TRANSACTIONS –Common Exam Question

Generally- the role of a conveyancer is to represent the parties.

Read S 34 (1) (a)of the Advocates Act- no unqualified person shall either directly or indirectly
take instructions, draw or prepare any document or instrument relating to the conveyancing of
property.

1. Correspondence
The concerned advocate must initiate correspondence upon taking instructions from a
client. Such correspondence will ensure that eventually the advocate is possessed of
adequate information to carry out the transaction and to advise the client accordingly.

2. When acting for a Seller/Vendor

An advocate who is acting for the seller/vendor must either by way of correspondence
or when taking instructions obtain the following information:

a. Full names and addresses of the parties, the buyer’s/purchaser’s advocate and those of
any estate agents involved.
b. Full particulars of property concerned, including the address where possible and
whether it is freehold or leasehold.
c. The price
d. Whether any preliminary deposit is required or has been paid and if so, to whom
e. Details of any mortgage or charge on the property (if any), the lenders name and the
outstanding balance.
f. Whether the property is vacant, whether there are any chattels thereon and such like
issues.
g. The expected date of completion and the fact as to whether the purchase monies are
available.
In addition the vendor’s advocate should carry out the following fundamental duties:
i. Prepares agreement
ii. Prepares title documents
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iii. Approves transfer/conveyance

iv. Procures execution of transfer of conveyance
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vi. Receives and accounts for the proceeds of sale to his client
3. When acting for a Purchaser
An advocate acting for a purchaser will obviously require similar information.
Further, the advocate must advise the client on the following issues;

a. Finances.
b. Possible future liability for taxes.
c. Legal costs and expenses of the conveyance.
In addition to giving the said advice, the purchasers advocate is responsible for the
following:
i. Carrying out the search
ii. Scrutinizing title documents
iii. Approving sale agreement and sends out requisition for the same
iv. Preparing transfer or conveyance and engrosses the same
v. Attending to the execution of conveyance or transfer where necessary
vi. Stamping and lodging documents for registration
vii. Obtaining and paying the purchase monies to the vendor’s advocate.

Lessor’s Advocate

Draw the lease.

This will require:
i. Details and proper instructions as the lease must reflect the precise intention of the
lessor and also the particulars of the property;
ii. Appropriate plans

Lesee’s Advocate

Investigate lessor’s title, even though this is implied.

Approve the draft lease- you will need to peruse the lease and see that your client got what he
bargained for, and share this information with your client.

Can an advocate act for both parties?

General principle is that one should avoid acting for both vendor and purchaser where there is a
conflict of interest or where such a conflict is likely to arise.
Both parties should consent.
This view has been restated by the court in the case of King woolen Mills and another v. Kaplan
and Stratton Advocates Civ. App. No.55/93 .

King woolen Mills and another v. Kaplan and Stratton Advocates Civ. App. No.55/93 .
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In this case, the firm named Kaplan and Stratton had acted for both the borrower and the lender in a
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borrowing transaction. The firm had prepared all the relevant documents, including the security

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documents.

Subsequently, the borrower had defaulted on repayment and had questioned the validity of the security
documents. Subsequently, Kaplan and Stratton had purported to enforce the said security and the
appellant sought a grant of injunction to stop the firm.

The Court of Appeal held that since Kaplan and Stratton Advocates were aware that there was likely to
arise a conflict between the lender and the borrower, and since having acted for both parties they were
in a position to be privy to information pertaining to the appellant‘s case, they would not purport to
enforce the said securities to the prejudice of the appellants. It is thus evident that an advocate should
not purport to act for a client during the trial process where a conflict of interest exists or is likely to arise

Other Instructions which must be taken

(a) Name and address of client(s) - if he is an alias, this must be indicated. Where a person/client
had different names, a statutory declaration must be sworn pursuant to the provisions of Oaths
and Statutory Declarations Act (Cap 15 Laws of Kenya). Where possible, one should know
his/her clients telephone number.
(b) Details of property being sold/bought should also be acquired i.e. Land Reference Number etc.
(c) It is imperative that where one is acting for a purchaser, he obtains a deposit. Though it is not a
legal requirement, a deposit is a clear indication that the purchaser is committed to the
transaction. The rules pertaining to adequacy and sufficiency of consideration should not be
disregarded. Pursuant to condition 3 of the L.S.K. conditions of sale, 10% of the purchase price
ought to be paid on or before executing the agreement for sale of land.
(d) Information pertaining to the completion date ought to be acquired when one is taking
instructions. The contractual date of completion must be concretely identified. This is because
it forms a turning point in the transaction i.e. it is the yardstick for establishing whether or not a
breach of the contract has occurred, whether there is a default by either of the parties. It is
open to the parties to provide for a completion notice.

If one of the parties defaults on or before the date of completion, the other party acquires a
right to rescind the contract as was highlighted above. No legal action may be taken on the
contract before expiry of the contractual date of completion.

Usually, the contractual date of completion follows the actual date of completion. A completion
notice may be served by a party who is ready and willing to complete the transaction. It will
usually require the other party, to complete payment within 21 days from receipt of such notice.
It is important that the party serving the notice be ready, willing and able to complete on his
part. After the contractual date of completion, a completion notice must be served. Twenty one
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(21) days thereafter, the other party, (party not in breach) may rescind the contract.
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(e) Information must also be obtained on the source of purchase monies. This is especially
important where one is required to give a professional undertaking.
(f) Care must be taken to ascertain whether there is a need for any special terms. An advocate
must ensure that he is cognisant of any terms agreed upon by the parties. The agreement
should cover all such terms.
(g) Nature of property ownership- Care must be taken to establish just who owns the property in
question. Is the property the subject of joint ownership/common proprietorship? Is the vendor
a natural person or a juristic person?
(h) Once the agreement for sale has been approved, it must be executed. Upon execution, it must
be stamped though failure to stamp is not fatal to the document. Upon execution, the deposit
must be obtained from the purchaser and held by a stakeholder, who may be an advocate for
the vendor or any recognized agent.
(i) A stakeholder holds the deposit pending the completion of the sale, but has no interest in the
money. Where there is a dispute between the vendor and the purchaser and the stakeholder
cannot determine who is entitled to the sum deposited, he ought to initiate interpleader
proceedings.

SKILLSET OF A CONVEYANCER

The worst mistake a practicing conveyancer can make is to fail to spot something fraudulent.
A conveyancer must not be negligent. Attestation of signatures without verifying could
constitute negligence. The need to verify if the practitioner on the other side is qualified is really
important. So are searches at government land registries.
A thorough understanding of the key conveyancing protocols is also important. (E.g. where
advocate for the buyer calls for original title documents and clearances without offering cheque
for purchase SUM to the sellers advocate or ensuring that requisite undertakings are given by
the buyer's financers.)
An understanding of the Law Society Conditions of sale, current practice notes and guidelines is
also important.
Conveyancing practitioners also have a duty of confidentiality to their clients.
There is also the obligation to act in the best interests of the client. There is need to verify a
client's identity before commencing any transaction particularly if the client is new or unknown
to the advocate.
There is also need to ensure that there are no conflicts of interest and also to ensure one has
proper instructions from the clients.
Sometimes it may be necessary to confirm your instructions in writing at each stage of the
transaction and especially just before an exchange of money or documents. If any one writes to
confirm instructions there can be no dispute at a later stage.
It is also important to keep full and detailed attendance notes record telephone conversations
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with the client as well as meetings in the office or outside the office with the client.
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Make diary entries of important dates such as completion dates or search priority records.

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Reflection: What skills and knowledge will one need as a conveyancer?

The process of transfer or modification of interest must be by way of a written document.

This is a statutory requirement as the transfer or modification is deemed only to be complete
once registration has been effected as demanded by the relevant statute. It is noteworthy that
the transfer or modification can be to oneself [cf. Assents and transmissions].
NB an advocate should be deligent and attention to detail because an advocate can be liable for
negligence. See Sykes v. Midlands Bank Co

Sykes v. Midlands Bank Co

The duty is that you do not explain verbatim to the client but you understand as a lawyer and expert on
the covenants. In this case it was held that an unusual clause which affected the tenants interest ought
to have been brought to the attention of the tenant by his lawyer. The lawyer was held liable for
negligence.

To appreciate conveyancing protocols better one ought to be familiar with the other branches
of law dealing with real property [Land Law], Obligations [Contract law] and
remedies/restitution [equity]. An appreciation of these branches of the law is thus necessary as
advice to client will run and cross through literally all of them in any ordinary conveyancing
transaction.
[Reflection: what is the relationship of the other branches of law in particular the law of
contract, the law of torts, the law of equity, the law of real property to conveyancing law and
practice?]
A Conveyancer must however not only be knowledgeable but also ethical and defensive.
See: Juma Muchemi v Waweru Gatonye HCCC No.853 of 2002 NBI and Momanyi V Hatimy
2003 KLR 545

CAN AN UN-QUALIFIED PERSON DO CONVEYANCING

Conveyance‖ describes the document used to effect the conveyancing, and ―

Conveyancer‖ describes the qualified professional or specialist lawyer retained by the parties to
a transaction to deal with the paper work and finances.
His role is to represent the buyer or seller or the mortgagor.
He must however be qualified in line with the decision of the Court of Appeal in the unreported
case of National bank of Kenya Ltd Vs Wilson Ndolo Ayah & Another (eKLR 2009).
See also Section 34 and 9 of Advocates Act discussed in the case

National Bank of Kenya Ltd v Wilson Ndola Ayah [2009] eKLR

In this suit the respondent prayed for, among other relief‘s, a declaration that a charge and Deed of
Guarantee, both in favour of the appellant, dated 23rd July 1990 and 17th October, 1990, respectively
were null and void ab initio, and that the sums of money they purportedly secured were irrecoverable.
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Both documents were executed by the respondent for the benefit of a company known as Bungu
Investments Ltd, and were drawn by one V. Nyamodi, advocate.
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At the trial, the Court found as a fact that on the respective dates the two documents were drawn, V.
Nyamodi did not hold a current Advocates Practicing Certificate, and was therefore not qualified to draw
those documents in view of the provisions of section 34 of the Advocates Act, Cap 16 of the Laws of
Kenya.

Section 34 –Advocates Act

1. Provides that No unqualified person shall, either directly or indirectly, take instructions or draw
or prepare any document or instrument—
(a) Relating to the conveyancing of property; or
(b) For, or in relation to, the formation of any limited liability company, whether private or public;
or
(c) For, or in relation to, an agreement of partnership or the dissolution thereof; or
(d) For the purpose of filing or opposing a grant of probate or letters of administration; or
(e) For which a fee is prescribed by any order made by the Chief Justice under section 44; or
(f) relating to any other legal proceedings; nor shall any such person accept or receive, directly or
indirectly, any fee, gain or reward for the taking of any such instruction or for the drawing or
preparation of any such document or instrument: Provided that this subsection shall not apply
to—
i. any public officer drawing or preparing documents or instruments in the course of his
duty; or (ii) any person employed by an advocate and acting within the scope of that
employment; or
ii. Any person employed merely to engross any document or instrument.
2. Any money received by an unqualified person in contravention of this section may be
recovered by the person by whom the same was paid as a civil debt recoverable summarily.
3. Any person who contravenes subsection (1) shall be guilty of an offence. (4) This section shall
not apply to—
(a) A will or other testamentary instrument; or
(b) A transfer of stock or shares containing no trust or limitation thereof.

Following the trial court‘s findings as aforesaid, the court concluded that the instrument of charge and
deed of Guarantee aforesaid were null and void ab initio, with the result that the money they secured
which had grown from the initial figure at Kshs. 10 million to Kshs. 57,308,137/50 was irrecoverable. The
court gave judgement in terms and thus provoked an appeal.

Mrs. V.Nyamodi did not hold a practicing certificate as at the date she drew the two documents. She was
qualified as an advocate having successfully gone through law School. However, qualifying as an
advocate is quite different from qualifying to practice as an advocate.

Neither the Advocates Act nor any other written law makes provision with regard to the validity or
otherwise of such documents. The Stamp Duty Act, Cap 480 Laws of Kenya, unlike the Advocates Act,
makes provision, in section 19, making an unstamped document inadmissible in evidence. The
Legislature, we think, not only made the document unregistrable but also made the document invalid for
any other purpose before stamping.
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Section 9 makes provision for qualifications for practicing as an advocate, and the qualifications include
having in force a current practicing certificate.
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9.Qualification of a Practicing Advocate

No person shall be qualified to act as an advocate unless—
(a) He has been admitted as an advocate; and
(b) His name is for the time being on the Roll; and
(c) He has in force a practicing certificate; and for the purpose of this Act a practicing certificate
shall be deemed not to be in force at any time while he is suspended by virtue of section 27 or
by an order under section 60 (4).

The Court of Appeal held that:

It is also noteworthy that the Advocates Act itself makes provision for the recovery of the fees paid to
such an advocate. So the innocent party is reasonably covered, although in our view provisions similar to
section 19 of the Stamp Duty Act should have been included in the Advocates Act to remove any doubt as
to the validity of documents drawn by unqualified advocates. It is public policy that courts should not aid
in the perpetuation of illegalities. Invalidating documents drawn by such advocates we come to the
conclusion that will discourage excuses being given for justifying the illegality.

A failure to invalidate the act by an unqualified advocate is likely to provide an incentive to repeat the
illegal Act. For that reason alone the charge and instrument of guarantee in this matter are invalid, and
we so hold

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LECTURE 4: FRIDAY 11 MARCH-1 APRIL 2016- MORNING SESSION (LECTURE HALL

A)

TOPIC 4: STATUTORY AND PROCEDURAL REQUIREMENTS OF CONVEYANCING

This element runs the student through the basic requirements of conveyancing.
The Student should at the end of this topic should appreciate the statutory and procedural
requirements of a conveyancing transaction including but not limited to:
(a) Procurement of consents and clearances,
(b) Execution, attestation and verification of signatures in a conveyancing instrument
(c) Identification of revenue implications of a transaction in regard to payment of stamp
duty and advising a client
(d) Registration of a conveyancing instrument.

A. COMPLETION DOCUMENTS
Upon getting the title documents, an advocate must discharge the following further
responsibilities.
These are the basics of conveyancing

A) CLEARANCE CERTIFICATES

There are two types of clearance certificates that are required and hence it is the duty of the
advocate/conveyancer to ensure they are obtained before the transaction can proceed
These are
1. Rates Clearance Certificate
2. Land Rent Certificate

1. Obtaining a Rates Clearance Certificate

Rates Clearance Certificate is required with respect to properties within municipalities and
falling within the jurisdiction of either the GLA or RTA or RLA.
See Section 24 of the Land Act

24. Implied covenant and conditions by lessee or licensee

In every grant, lease or licence for public land under this Act, there shall be implied covenants and
conditions by the grantee, lessee or licencee that the grantee, lessee or licencee shall—
(a) pay rent and royalties thereby reserved at the time and in the manner therein provided; and
(b) pay all taxes, rates, charges, duties, assessments or outgoings of whatever description that may
be imposed, charged or assessed upon the land or the buildings thereon, or upon the lessor or
grantor or lessee or licensee in respect thereof.

This rate is imposed pursuant to the Rating Act, Cap 267, which allows/authorizes all devolved
to raise revenue from land located within their municipalities/jurisdictions.
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Rates are usually levied after the local authority concerned has undertaken valuation and
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A proprietor may object to the valuation. However, if no objections are raised, the rates are
confirmed after sometime.
Upon payment of the requisite rates, one is issued with a Rates Clearance Certificate. Once
obtained, the land may be charged or disposed off to another party.
Without a Rates Clearance Certificate, the land registrar will not register any transfer or
conveyance or any dealing in land. Rates must be paid whether property is freehold or
leasehold.
Rates Clearance certificate must be produced when transfers, vesting or leasing land.
Section 38 – L.R.A

38. Certificates of payment of rates.

1. The Registrar shall not register any instrument purporting to transfer or to vest any land, a
lease of land, situated within the area of a rating authority unless, a written statement, by the
relevant government agency, certifying that all outstanding rates and other charges payable to
the agency in respect of the land including rates and charges for the last twelve months and up
to the date of request for transfer have been paid there is produced to the Registrar.
2. No statement shall be required under subsection (1) if the instrument relates to—
(a) land which is subject to a lease, and the leasehold interest is, by virtue of any written
law, the rateable property; or
(b) a lease, and the land or another leasehold interest is, by virtue of any written law, the
rateable property.

Application is made to the relevant council at a fee.

See specimen

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2. Obtaining a Land Rent Certificate

A Land Rent Certificate is required where the land in question holds leasehold interest.
Must be produced. See Section 39 L.R.A

39. Certificates as to payment of rent.

1. The Registrar shall not register an instrument purporting to transfer or create an interest in
land, unless a certificate is produced with the instrument, certifying that no rent is owing to
the national or county governments in respect of the land.
2. The Registrar shall not register an instrument effecting a transaction unless satisfied that any
consent required to be obtained in respect of the transaction has been given by the relevant
County Land Management Board on the use of the land, or that no consent is required.

Currently issued in Nairobi.

OBTAINING A CLEARANCE CERTIFICATE

1. Obtain demand for land rates/rent

2. In case of rent, settle the demand through a designated bank.
3. In the case of rate, settle the demand at the county offices.
4. Submit proof of payment.
5. Clearance certificate issued after audit.

CHALLENGES

1. Poor records
2. Centralization
3. Processing the clearance itself.

B.CONSENTS

Could be statutory (concept of eminent domain) or out of ordinary agreement.

One may need:/or a combination of
i. Commissioner of Lands’ Consent/ Landlords’
ii. Land Control Boards’ Consent.
iii. Kenya Railways’ Consent.
iv. KAA’s Consent.
v. Mortgagee’s or Chargee’s consent .
vi. Presidential Consent.
vii. Consent of trustees to National Parks.
viii. Spousal consent
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There are few which are common these are

1. Obtaining Consent of the Commissioner for Lands-

The Consent of the Commissioner for Lands is required under RTA and the RLA where the land is
leasehold but not freehold.
Like the Land Rent Certificate, the consent of the Commissioner for Lands is not required under
the GLA.
Lack of consent makes the conveyancing document void- Denning Vs. Edwards (1958) EA
See Section 55 (b) of L.R.A

55. Lessor’s consent to dealing with leases.

If a lease contains a condition, express or implied, by the lessee that the lessee shall not transfer, sub-
let, charge or charge or part with the possession of the land leased or any part of it without the
written consent of the lessor, and the dealings with the lease shall not be registered unless—
(a) the consent of the lessor has been produced to, and authenticated to the satisfaction of the
Registrar and the Registrar shall not register any instrument purporting to transfer or create
any interest in that land, and
(b) a land rent clearance certificate and the consent to the lease, certifying that no rent is owing to
the Commission in respect of the land, or that the land is freehold, has been produced to the
Registrar.

See sample

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2. Obtaining the Land Control Board Consent-

This is required where land in question is agricultural land.
As a requirement, it is imposed by the Land Control Act, Cap. 302.
Foreigners are normally denied this consent.
See John Mwangi Njoroge –vs- Leah Wairimu & Another [2010] eKLR; Nairobi ELC No. 518 of
2008

LCB APPLICATION PROCESS

i. made in the prescribed Form 1.
ii. To local district Board by either or both parties
iii. Considerations under S .9 after hearing the party(ies)
iv. Consent granted using prescribed Form
v. Applications must be for each controlled transaction. See Fred Fedha & Anor Vs Majani
2010 eKLR

Transactions requiring LCB Consent

S6(1) lists transactions which require LCB Consent:

i. Sale, transfer, lease, mortgage, exchange, partition or other disposal of or dealing in any
agricultural land situated within a land control area;
ii. Division or agricultural land into two or more parcels held under separate titles;
iii. Issue, sale, transfer, mortgage or any disposal of or dealings with any share in a private
company or co-operative society which owns agricultural land

S6(2)- the declaration of a trust of agricultural land situated within a land control area requires
LCB consent.

Failure to obtain LCB Consent
Transaction rendered null and void: See Mbuthia Charagu v. Kiarie Kaguru

Transactions in which LCB Consent is NOT required

S6(3) provides that LCB Consent is not required in respect of the following:
i. Transmissions of agricultural land (whether by testate or intestate) unless that
transmission would result in the division of the land into two or more parcels to be held
under separate titles;
ii. Transactions to which the Government is a party or transactions which involve trusts of
land.

Granting and refusing consent

S9 LCA lists situation in which LCB consent will be granted or refused.

From these situations the following objects of the LCA can be identified:
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i. To ensure that agricultural land is acquired by persons who can farm the land properly.
ii. To ensure that agricultural land is equitably distributed among persons who can farm it.
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iii. To ensure that land is not acquired for speculative purposes.

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Note- S9 (1) (c)- where the person intending to acquire agricultural land is a non-citizen,consent
SHALL NOT be given.

Presidential Exemptions
Under S24 the President has power to exempt any transaction or person from the provisions of
the LCA. Such exemption is granted by way of notice on the gazette.

Challenges

Lack of control of these boards has resulted in a “quagmire of confusion”.

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3. Obtaining Spousal Consent

There is over-riding interest for spousal rights over matrimonial property. See Section 28 of LRA.
See E. N. W. vs. P. W. M. & 3 Others [2013] eKLR; Nairobi ELC No. 240 of 2012

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OTHER CONSENTS

4. Obtaining Town Clerk’s Consent

This consent is only required where the lessor is a local government, for example, a city council.

5. Obtaining Consent of Trustees

The requirement for consent of trustees arises in cases of settled land, i.e. where land in
question is vested in the National Parks of Kenya.
Properties adjoining or within parks require this consent prior to any conveyancing transaction
involving such land. The Kenya Wildlife Service is the Trustee of such parks. This is to ensure
there is no derogation of title.

6. Obtaining Consent of Public Corporation/Authority

Where one is dealing with a public corporation or authority e.g. the Kenya Railway Corporation
or Kenya Ports Authority, one must obtain the consent of that corporation or authority.

7. Consent of Mortgagee/Chargee

Chargor or mortgagor must obtain the consent of the chargee or mortgagee before he can
transfer or lease the mortgaged property that is the security of the chargee or mortgagee.

8. Consent of landlord and head lessor

A tenant must always obtain the consent of the landlord if he wishes to assign his interest or
sublet the property.

LACK OF CONSENT GENERALLY

Responsibility to obtain consent rests with he who intends to dispose of an interest

See LSK Conditions of Sale No. 16.

16.Consents
The property is sold subject to all consents being obtained
1. The vendor is responsible for obtaining all consents and where possible the purchaser will
join in making any application.
2. The vendor is responsible for obtaining the discharge of any encumbrances to which the
property is not sold subject to

Lack of consent means transaction is void. See

i. Jacob Gichuki Minjire Vs AFC CACA 61 of 1982
ii. Kariuki Vs Kariuki 1983 KLR 225
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iii. Fedha Vs Majani

See Section S.20 of Land Control Act Cap 302
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20. Registration of documents.

1. The registrar shall refuse to register an instrument effecting a controlled transaction unless
he is satisfied that any consent required by this Act to be obtained in respect of the
transaction has been given, or that no consent is required.
2. If the registrar contravenes subsection (1) in relation to a share, he shall be guilty of an
offence and liable to a fine not exceeding two thousand shillings or to imprisonment for a
term not exceeding two months, or to both such fine and imprisonment.

In conclusion, it is one Completion Document susceptible to abuse.

i. These consents are required to complete any given transaction. In the absence of these
consents the conveyance e.g. lease, mortgage etc will not be registered
ii. Condition 16 of the LSK provides that for purposes of completion, all necessary consent
must be obtained by the vendor/lessor (he who is parting with the interest). In most
agreements in practice, the person obtaining the interest is given a duty to assist in
obtaining the consent especially where both parties presence is required.
iii. If the consent is not availed or obtained one will be held to be in breach. Unfortunately,
the person who is aggrieved has remedies in damages only. There is no room for specific
performance because as long as the consent is not given within the specified period, the
agreement lapses

See the following Case

Mucheru v Mucheru [2002] 2 EA 456

The CA held that if LCB consent is not obtained the transaction becomes void even if the duty to obtain
the consent was not exercised.
Facts: The respondent filed suit seeking an order to bury a deceased husband on the property in the
control of the appellant who was the widow of the registered proprietor. The respondent claimed that
her deceased husband was entitled to a portion of that property under Kikuyu customary law. The
respondent proved trust under the customary law and that the administrator was to obtain LCB consent.
The court held she was entitled to the portion subject to the LCB consent.
The CA held that the establishment of a trust is a disposition of property within the requirements of s.6
LCA and the LCB consent was necessary. Having not been obtained within the required time i.e. 6
months, the whole disposition was void.

Jacob Gichuki Minjire v AFC CA 61 of 1982

AFC sold Dagoretti/Riruta/1139 to the appellant at a public auction where the appellant was the highest
bidder. The appellant paid 255 deposit but no agreement was signed as per s.3 of LCA. AFC refused to
complete despite payment of the balance of the bid price within the required 30 days. The appellant
sued for specific performance but AFC contended that the land was agricultural and a controlled parcel
leading to the auction being a controlled transaction as per s.6(2) of the LCA and the sale was
consequently void for all intents and purposes as no LCB consent had been obtained or an application
filed within 6 months.
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Held: No specific performance would be granted because:

a) Property had already been redeemed. Equity could not act in vain
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Bosire J said:
“The lack of statutory consent at the expiry of the 3 months makes the transaction void for all purposes
until then there is only a de facto agreement which has no legal effect”.

NOTE: To go round the above you may provide in the Sale Agreement that lack of consent will not
prevent one from seeking an order for specific performance.

B) FORMALITY OF CONVEYANCING –DOCUMENTATION (NEED FOR WRITING)

This is the requirement of writing, which finds its origin in section 3 of the Law of Contract Act.
See also Section 38 of the Land Act
There are other semi formalities e.g. execution of the document, attestation of the execution,
verification of the execution process and other statutory requirements.
Why is it that section 3 of the Law of Contract Act and section 97 of the Evidence Act demand
that a transaction relating to land must be in writing?
1. To ensure certainty, as land is unique: therefore in case of disagreement, the remedy of
specific performance may be available.
2. Land is very unique as a merchantable item, consequently it is important that any
fraudsters who may wish to get it quickly or fraudulently; the Statute of Frauds 1677
specifically provided that the requirement as to writing was to guard against any
fraudulent dealings. The formality as to writing performs a forensic function in
providing simple yet conclusive evidence of the fact of an agreement.
3. Land besides its socio-economic effect and the ability to attract fraudsters and rogues,
also has a variety of uses reflected in the many different kinds of interest that one
particular piece of land could provide. E.g. Parcel A of land, which is a freehold, could be
leased and subsequently mortgaged. The mortgagee can thereafter sell the same. The
evidentiary function of writing is not the fact of agreement but the content of the
agreement. Therefore writing performs the useful evidentiary function in encouraging
precision and recording such precision for posterity.
4. It has also been stated that writing performs the protective function of giving the
proprietors of land an opportunity to think again before dealing with this very unique
item.

C) EXECUTION AND ATTESTATION AND VERIFICATION

By execution we mean signing of the documents and by attestation we mean witnessing of the
documents.
See Section 38 of the Land Act

38. Regaining possession of land after concluding contract of sale of land

1. No suit shall be brought upon a contract for the disposition of an interest in land unless—
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(a) the contract upon which the suit is founded—

i. is in writing;
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(b) the signature of each party signing has been attested to by a witness who was present
when the contract was signed by such party.
2. Subsection (1) shall not apply to a contract made in the course of a public auction nor shall
anything in that subsection affect the creation or operation of a resulting, implied or a
constructive trust.

1. Execution and Attestation

Execution is the making of an imprint by the person entitled to an interest in land on a

conveyance.
The signing of the agreement is one of the usual means of executing a conveyance.
In imprinting, men use their left thumb print while women use their right thumb print.
Where there is no thumb, the print of the big toe may be used.
Where a juristic person e.g. a company is involved, the company seal may be affixed and
attested by either two directors of the company or single director and the secretary of the
company.
Legal Notices 146-153 of 2005 (requirements as to passport size photos, PIN and ID Numbers) in
execution. See Section 44 (5)
See Section 44 of Land Registration Act

44. Executions of instruments in writing.

1. Except as otherwise provided in this Act, every instrument effecting any disposition under this
Act shall be executed by each of the parties consenting to it, in accordance with the provisions
of this section.
2. The execution of any instrument referred to in subsection (1),by a person shall consist of
appending a person’s signature on it or affixing the thumbprint or other mark as evidence of
personal acceptance of that instrument.
3. The execution of any instrument referred to in subsection (1) by a corporate body, association,
co-operative society or any other organization shall be effected in the presence of either an
advocate of the High Court of Kenya, a magistrate, a Judge or a notary public.
4. An instrument executed out of Kenya shall not be registered unless it has endorsed on it or
attached to it a certificate in the prescribed form completed—
(a) if the instrument was executed in the Commonwealth, by a judge, magistrate, notary
public, commissioner for oaths; or
(b) if the instrument was executed in a foreign country outside the Commonwealth, by any
other person or class of persons as the Cabinet Secretary may prescribe.
5. The transferee shall in addition to executing the instrument, attach the following—
(a) a copy of an identity card or passport; and
(b) a copy of a Personal Identification Number certificate;
(c) passport-size photographs;
(d) where applicable, a marriage certificate; or
(e) such other identification documents as the Cabinet Secretary may prescribe

Under the Land Act in regards to transfers See Section 43 of Land Act
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43. Transfer
1. In this Part, “transfer” includes a conveyance, an assignment, a transfer of land, a transfer of
lease or other instrument used in the disposition of an interest in land by way of transfer.
2. A proprietor may transfer land, a lease or a charge to any person (including himself or herself),
with or without consideration, by an instrument in the prescribed form.
3. The transfer shall be completed by the registration of the transferee as proprietor of the land,
lease or charge.
4. The transferee of a charge may require the chargor to execute the transfer for the purpose of
acknowledging the amount due under the charge at the date of execution of the transfer.

See Lamchand Fulchand Shah v. I&M Bank

Lamchand Fulchand Shah v. I&M Bank

CA decreed that where there is a question of proper or improper attestation then the Advocate who
purportedly witnessed the execution must be made a party to the suit. Therefore a conveyance must
take care and ensure that the document has been executed in his presence.

2. Verification

Verification is provided for under Section 45 of the Land Registration Act

At subsection 1 of this section it is provided that a person executing an instrument should
appear before the Registrar or such public officer or other person as is prescribed.
Unless the person is known to the Registrar or to the public officer, he should be accompanied
by a credible witness for the purpose of establishing his identity.
It therefore becomes incumbent upon the Registrar or the public officer to satisfy himself as to
the identity of the person appearing before him and to ascertain whether he freely and
voluntarily executed the instrument.
Having so verified, the Registrar or the public officer is required to prepare a certificate to that
effect.
The Registrar is empowered to dispense with verification in certain instances i.e. where it
cannot be obtained or it can be obtained only with great difficulties and that he is otherwise
satisfied that the document has been properly executed. He may also dispense with verification
in cases in which to his knowledge the document has been properly executed.
In any event, the registrar is enjoined to record the reasons for his dispensing with verification.
These provisions apply only to documents executed in Kenya.
If execution has occurred in the Commonwealth, verification should be undertaken by a judge,
magistrate, notary public, commissioner for oaths, or any administrative officer who is under an
obligation to endorse thereon or attach thereto a certificate in the prescribed form.
If execution has occurred in any other country, verification ought to be by a British consular
officer, pro consul or such other person as determined by the minister.
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45. Verification of execution.

1. Subject to subsection (3), a person executing an instrument shall—
(a) appear before the Registrar, public officer or other person as is prescribed; and
(b) be accompanied by a credible witness for the purpose of establishing identity, unless the
person is known to the Registrar, public officer or other person.
2. The Registrar, public officer or other person shall identify the person and ascertain whether the
person freely and voluntarily executed the instrument, and shall complete thereon a certificate to
that effect.
3. The Registrar may dispense with verification under this section—
(a) if the Registrar considers that it cannot be obtained or it can only be obtained only with
difficulty and is otherwise satisfied that the document has been properly executed; or
(b) if the Registrar knows the document has been properly executed, and shall record on the
document the reasons for dispensing with the appearance of the parties.

SAMPLE VERIFICATION

I CERTIFY that I was present and saw the MAN DOOR duly sign this TRANSFER and that the above
photograph is a true likeness of his and the particulars of his National ID and Tax PIN Certificate are correct
and the Originals have been produced to me for inspection.
Signature of Witness: -------------------------------------------------
Name: ---------------------------------------------------------------------
Address: ------------------------------------------------------------------
Occupation: --------------------------------------------------------------

Documents are divided into 3 categories

a. Documents executed in Kenya

i) Land Registrar

ii) Judge or Magistrate

iii) Registrar or Deputy Registrar of the High Court

iv) Administrative Officer

v) Superintendent of Prisons

vi) Advocate

vii) Bank Official

b. Documents executed in the Commonwealth

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i) Judge or Magistrate
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ii) Justice of the Peace

iii) Notary Public

iv) Commissioner for Oaths

v) Administrative Officer

c. Documents executed in a Foreign Country

i) Notary Public _ Sch.IV

ii) British Consular Officer or Proconsul or such other person or class of persons as the
Minister may determine

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STAMP DUTY AND CONSEQUENCES THEREOF IN VARIOUS TRANSACTIONS

As part of conveyancing and taxation, stamp duty is basically revenue raised by the Government
by requiring stamps sold by the Government to be affixed to designated documents.
The stamps are affixed or embossed or impressed by means of a red dye or franking or adhesive
revenue stamps.
The Stamp Duty Act (Cap 480) Laws of Kenya designates various conveyancing instruments
to be stamped.
Section 5 of the said Act demands that every instrument relating to property in Kenya, if
specified in the Schedule to the said Act; do fetch stamp duty as prescribed.
The duty is to be paid within 30 days of execution of the document or of its receipt if it is
executed outside Kenya (Section 6). [Reflection: when do you date the conveyancing
instrument? Who authorizes payment of duty when there is a delay beyond the statutory
time and what is the penalty?].

CHARGE OF DUTY UPON INSTRUMENTS

5. Liability to stamp duty.
Subject to the provisions of, and to the exemptions contained in, this Act and any other written law,
every instrument specified in the Schedule, wheresoever executed, which relates to property situated,
or to any matter or thing done or to be done, in Kenya, shall be chargeable with the stamp duty
specified in that Schedule.

6.Time of stamping and liability for stamping

1. Subject to the provisions of this Act or of any other written law, every instrument, unless it is
written on duly stamped material, shall be duly stamped with the proper duty before the
expiration of thirty days after it is first executed, or after it has been first received in Kenya in
case it is first executed at any place out of Kenya, unless the opinion of a collector with respect
to the amount of duty with which the instrument is chargeable has, before the expiration of
that period, been required under section 17.
2. If the opinion of a Collector with respect to the amount of duty with which any instrument is
chargeable has been required under section 17, the instrument shall be stamped in accordance
with the assessment of the collector within twenty-one days of the date of the notice of the
assessment.
3. Where in the Schedule or in any other written law it is specified that an instrument is to be
stamped before execution, it shall be stamped before execution by any party thereto.
4. If any instrument which is chargeable with stamp duty is not duly stamped, the person or
persons respectively specified in the Schedule or in any other written law as being liable for
stamping shall be liable, or jointly and severally liable, as the case may be, to the collector for
the payment of the specified duty.
5. If any instrument which is liable to stamp duty is not duly stamped, every person specified in
the Schedule or in any other written law as being responsible for stamping shall also be guilty of
an offence and liable to a fine not exceeding two thousand shillings.
6. Where in the Schedule or in any other written law the responsibility for stamping is imposed
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upon more persons than one, every person on whom that responsibility is imposed may, if the
instrument is not duly stamped, be proceeded against either civilly or criminally without
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reference to any civil liability of the parties inter se for the payment of the stamp duty.

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General Principle – All documents/instruments must be stamped unless specifically

exempted by the Act.
Vide Section 10A where the value of the property is not known it will be referred to the
Government Valuer

10A.Valuation by Government Valuer

1. The Collector of Stamp Duties shall refer to the Chief Government Valuer any conveyance or
transfer on sale of any immovable property before or after registration of the relevant
instruments in order to determine the true open market value of such property as at the date
of the conveyance or transfer for purposes of ascertaining whether any additional stamp duty is
payable.
2. The Collector shall immediately demand by written notice to the purchaser or transferee or his
authorised agent the payment of any additional stamp duty that may become payable after the
valuation has been effected under subsection (1), and such payment shall be made within
twenty-one days from the date of posting of the notice.
3. The Collector shall cause caveats or restrictions, as the case may be, to be registered against the
title of any immovable property immediately upon valuation under subsection (1) where
additional stamp duty becomes due and payable.
4. The provisions of this section shall also apply to gifts inter vivos under section 52(1) and to
partitions under section 71(1) and (2).

Stamping out of Time

See Section 20

20. Stamping out of time.

1. Where an instrument is chargeable with stamp duty under this Act and should have been
stamped before a certain event or before the expiration of a certain period, but has not been
so stamped, a collector may give leave for the stamping of the instrument if he is satisfied –
(a) that the omission or neglect to stamp duly did not arise from any intention to evade
payment of stamp duty or otherwise to defraud; and
(b) that the circumstances of the case are such as to justify leave being given.
2. If the collector grants leave under subsection (1) for the stamping of an instrument, the
instrument shall be stamped on payment of the unpaid duty including any additional stamp
duty and of a penalty of five shillings in respect of every twenty shillings and of any fractional
part of twenty shillings of the duty chargeable thereon and in respect of every period of three
months or any part of such period after the expiration of the time within or before which the
instrument should have been stamped: Provided that the Senior Collector of Stamp Duties may
remit the whole or any part of the penalty provided by this subsection.
3. If any person applying for leave under this section is dissatisfied with the decision of the
collector upon that application, that person may require his application to be referred to the
Minister, whose decision thereon shall be final for all purposes.
4. Upon any application for leave under this section, the collector, or the Minister, may require
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sworn or other evidence in support of the application.

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5. When an instrument has been stamped by leave under this section it shall be deemed to have

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been duly stamped.

6. Notwithstanding the provisions of this section, no bill of exchange or promissory note shall,
except as provided in sections 21, 22, 34 and 36, be stamped after execution.
7. In this section, “collector” does not include the Senior Collector of Stamp Duties.

There is a Penalty for paying out of time which is Ksh 1/= in respect of every Ksh 20/= and
of every fractional part of Ksh 20/= of the duty chargeable in each quarter of the year.

Failure to Pay Stamp Duty

Evasion will result in non-recognition and avoidance.

Section 19 – Non-admissibility of unstamped instruments in evidence.

19. Non-admissibility of unstamped instruments in evidence; and penalty.

1. Subject to the provisions of subsection (3) of this section and to the provisions of sections 20 and
21, no instrument chargeable with stamp duty shall be received in evidence in any proceedings
whatsoever, except –
(a) in criminal proceedings; and
(b) in civil proceedings by a collector to recover stamp duty,unless it is duly stamped.
2. No instrument chargeable with stamp duty shall be filed, enrolled, registered or acted upon by
any person unless it is duly stamped.
3. Upon the production to any court (other than a criminal court), arbitrator, referee, company or
other corporation, or to any officer or servant of any public body, of any instrument which is
chargeable with stamp duty and which is not duly stamped, the court, arbitrator, referee,
company or other corporation, or officer or servant, shall take notice of the omission or
insufficiency of the stamp on the instrument and thereupon take action in accordance with the
following provisions –
(a) if the period of time within or before which the instrument should have been stamped
has expired and the instrument is one in respect of which a person is specified in the
Schedule to this Act as being liable for the stamping thereof, the instrument shall be
impounded and, unless the instrument has been produced to a collector, shall forthwith
be forwarded to a collector;
(b) in any such case, before the exclusion or rejection of the instrument, the person
tendering it shall, if he desires, be given a reasonable opportunity of applying to a
collector for leave under section 20 or of obtaining a certificate under section 21;
(c) in all other cases, unless otherwise expressly provided in this Act, the instrument shall,
saving all just exceptions on other grounds, be received in evidence upon payment to
the court, arbitrator or referee of the amount of the unpaid duty and of the penalty
specified in subsection (5), and the duty and penalty, if any, shall forthwith be remitted
to a collector with the instrument to be stamped after the instrument has been admitted
in evidence.
4. If any person is empowered or required by any written law to act upon, file, enrol or register a
duplicate or copy of any instrument, and if the original of that instrument would require to be
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duly stamped if acted upon, filed, enrolled or registered by that person, that person may call for
the production of the original instrument or for evidence to his satisfaction that it was duly
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production of the original instrument duly stamped or of evidence thereof.

5. The penalty on stamping any instrument out of time referred to in paragraph (c) of subsection (3)
shall be ten shillings in respect of every twenty shillings and of any fractional part of twenty
shillings of the duty chargeable thereon and in respect of every period of three months or any
part of such a period after the expiration of the time within or before which the instrument
should have been stamped.

Section 46 of Land Registration Act as it provides that no document is acceptable for registration
if stamp duty has not been duly paid and documents properly stamped.

46. Stamping.
An instrument required by law to be stamped shall not be accepted for registration unless it is
stamped in accordance with the Stamp Duty Act, Cap. 480.

Failure to pay is equivalent to evasion of tax and is a criminal offence under S113 of the Act the
penalty of which is imprisonment for a term not exceeding one year or to a fine to exceeding
not 100,000, or to both such imprisonment and such fine.

113. Penalty for frauds in relation to stamp duties.

1. Any person who practises or is concerned in any fraudulent act, contrivance or device, not
specially provided for by any written law, with intent to defraud the Government of any stamp
duty or penalty shall be guilty of an offence and liable to imprisonment for a term not
exceeding one year or to a fine not exceeding one hundred thousand shillings, or to both such
imprisonment and fine.
2. Any person who, for the purpose of evading any stamp duty or penalty, falsifies, mutilates or
destroys any book of account or other instrument whatsoever shall be guilty of an offence and
liable to imprisonment for a term not exceeding one year or to a fine not exceeding one
hundred thousand shillings, or to both such imprisonment and fine.

AMOUNT PAYABLE

Amount payable is that prescribed by the Act on advise of the Minister for Finance .
Payable by the recipient of interest.
The Stamp duty is payable as follows for the following documents

a) Transfers:
4% if situate within a city or municipality
2% if outside city/municipality
Amount pegged on value of property. (Sec 10A)

b) Leases:

1% for 3 years or less

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2% for more than 3 years

Amount Pegged on annual rent or averaged annual rent.
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c) Mortgages/ Charges/other securities.

At 0.1%. It is 1/= for every 1000/=

d) Discharges/Releases/ Reconveyance.
0.05% of amount redeemed.

e) Nominal Duty
Only certain prescribed documents (Assents, POA, Trust Deeds, supplemental security, partial
discharges)

PROCEDURE
Applicant presents document for assessment by Collector. Fills Form SD1
Assessor confirms if duty is payable, counterchecks info on the form and document, ascertains
amount and endorses both Form and document
Applicant pays amount in designated bank
Returns document with proof of payment to Collector
Collector reconciles records and stamps document by franking
Audited by Government accountant and dispatched
The payment is in 4 COPIES as follows

1 Original (White) copy for the duty payer

2 Duplicate (Blue) copy to be forwarded to Commissioner

of Domestic Taxes by the bank

3 Triplicate (Green) copy to be forwarded to the Registrar

of Titles/Lands for their record
keeping

4 Quadruplicate (Yellow) copy to be retained by the bank.

RELIEFS & EXEMPTIONS Under Stamp Duty Act

S.17 : adjudication in collector’s discretion
S.106 : general ministerial recommendation for relief or to exempt in the interest of the public
Development partners, research institutions, agric
S.117 : General statutory exemptions
Educational institutions
Family investment companies(LN 92 of 2007)
S.52(2)-charitable institutions, 52(6) –trustees
S.96 –subsidiary companies
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Under Other Statutes

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1. Central Bank of Kenya Act (Cap 491)- S.7.

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2. Export Processing Zone Act (Cap 517)-S.29(2).

3. Shelter Afrique Act (Cap 493).
4. Privileges & Immunities Act (Cap 179)
5. Companies Act (Cap 486)-assurances in winding up

Depends entirely on who is liable to pay.

CONSEQUENCES OF STAMP DUTY IN A GIVEN SET OF FACTS

1. Is it payable?
2. What is the rate?
3. Who pays or is liable to pay?
4. On which document?
5. Is there relief or is it exempt?
6. Clear, calculate the amount inclusive of any penalty

CHALLENGES AND REFORMS

Challenges in the processing itself
Rates payable esp. on transfers
Persons liable to pay or documents
i. From each according to his means
ii. First time home owners
iii. Mortgaged homes
iv. Retirees
v. Estate beneficiaries should at worst have a claw back
E-stamping.
Reverse liability-transferors not transferee

Exercise

The Royal Dutch Embassy in Kenya has agreed to sell to Gunter Rick an apartment for the agreed value of
Kshs.10 million. The property is situate in Nairobi. Gunter receives the Transfer Deed from his lawyers on
1st Dec, 2014.He signs them before a Notary Public and couriers them back to Kenya. He has dated the
Deed 1st Dec, 2013 . The Deeds don’t get to Kenya and are not received by the lawyer until 1st February
2015. The lawyer’s clerk then adds to the delay and lodges the Deeds for assessment some 2 months later.
The Govt valuer confirms the 10m value. What are the stamp duty consequences of this transaction?

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CAPITAL GAINS TAX AND CONSEQUENCES THERE OF IN VARIOUS TRANSACTIONS

What is Capital Gains Tax?

Capital Gains Tax (CGT) is a tax chargeable on the whole of a gain which accrues to a company or
an individual on or after 1st January, 2015 on the transfer of property situated in Kenya,
whether or not the property was acquired before 1st January, 2015.
It is not a new tax. It was suspended in 1985 and has now been re-introduced effective 1st
January, 2015.

What is the rate of tax?

The rate of tax is 5% of the net gain. It is a final tax and cannot be offset against other income
taxes.

What is property?
Property is defined in the law (Eighth Schedule to the Income Tax Act). It includes land, buildings
and marketable securities.
Marketable Securities are defined to include a security that is capable of being sold and stock is
defined in Section 2 of the Stamp Duty Act.
It therefore applies to both listed and un-listed securities.

Who is liable to pay the tax?

The tax is to be paid by the person (resident or non-resident) transferring the property, that is,
the transferor.
The transferor can either be an individual or a corporate body.
For investment shares, while the tax incidence is on the transferor, the responsibility to collect
and account for the tax is on the stock broker.

What constitutes a transfer? (The Eighth Schedule)

A transfer takes place: -
(a) where a property is sold, exchanged, conveyed or disposed of in any manner (including
by way of gift); or
(b) on the occasion of loss, destruction or extinction of property whether or not
compensation is received; or
(c) on the abandonment, surrender, cancellation or forfeiture of, or the expiration of rights
to property.

How do you determine the net gain?

The net gain is the excess of the transfer value over the adjusted cost of the property that has
been transferred. It is this excess that is subjected to tax at 5%.
The Transfer value of the property is the amount or value of consideration or compensation for
transfer of the property less incidental costs on such transfer.
The Adjusted cost is the sum of the cost of acquisition or construction of the property;
expenditure for enhancement of value and/or preservation of the property; cost of defending
title or right over property, if any; and the incidental costs of acquiring the property.
The adjusted cost shall be reduced by any amounts that have been previously allowed as
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deductions under Section 15(2) of the Income Tax Act.

The transferor has the responsibility to prove the cost of acquisition and hence should provide
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However in the instances where the information is not available, then the amount of
consideration of the acquisition of the property shall be deemed to be equal to the market value
of the property at the time of acquisition or to the amount of consideration at the time of stamp
duty computation on the transfer by which the property was acquired whoever is lesser.

How will related party transactions be treated?

Two parties are related if:-
(a) Either person participates directly or indirectly in the management control or capital of
business of the other; or
(b) A third person participates directly or indirectly in the management control or capital of
business of both.
Where there is concern that a related party transaction may have led to reduction in the
transfer value with a view to minimizing the capital gains tax, the Commissioner will make
necessary adjustments and/or revaluation to determine the market price

What is the due date/tax point?

It is a transaction based tax and should therefore be paid upon transfer of property but not later
than the 20th day of the month following that in which the transfer was made.
Penalties and Interest apply in accordance with the provisions of the Income Tax Act.

How is the tax to be declared?

The taxpayer will do a self-assessment to determine the gain upon which tax is computed.
The computations are subject to Commissioner’s confirmation of correct gain as the basis of tax
computation.

Procedure of Filing the CGT

Conveyancing considerations with regard to CGT
Upon transfer of property the transferor shall complete the relevant declaration form, that is
CGT form, and compute and pay the tax thereon.
The following documents are required:

a) Completed CGT form by the seller.

b) Copy of Sale/Transfer Agreement of the property.

c) Proof of the incidental costs related to the acquisition and transfer of the property.

d) A copy of the title deed or ownership document for the property.

e) Report from a registered valuer for property transactions between related parties.

f) Any other document/information that the Commissioner may require.

The declaration forms (CGT Forms) are as follows:

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i) CGT1 – Transfer of land and buildings by individuals and corporate bodies;

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ii) CGT1P – Transfer of land and buildings by partnerships;

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iii) CGT2 – Transfer of marketable securities by individuals and corporate bodies;

iv) CGT2P – Transfer of marketable securities by partnerships;
v) CGT3 – Declaration for transactions that are exempt from CGT.
The forms can be downloaded from the KRA website.

The procedure for payment of CGT is outlined in CGT Guidelines issued by the Kenya Revenue Authority
as follows:

i) The transferor of property or the stockbroker, in case of security transfer, completes the
relevant CGT declaration form (please see above). The completed CGT form is a self-
assessment of the tax due.
ii) The CGT declaration form is filled in triplicate: one copy to be retained by the receiving
bank, one for the taxpayer and the last copy is delivered to the KRA Domestic Taxes
Department Office.
iii) The self-assessment (completed CGT form) is submitted to the Commissioner of KRA for
verification and confirmation by an assessor who ascertains and endorses the form and
documents.
-The documents that accompany the declaration form include:

a. A Copy of Sale or Transfer Agreement of the property;

b. Proof of the incidental costs related to the acquisition and transfer of the property;
c. A copy of the title deed or ownership document for the property; and
d. A report from a registered valuer for property transactions.
iv) The transferor pays the amount into the Capital Gains Tax collection Account No.
100223577 at the Central Bank of Kenya; through a commercial bank. KRA recognizes the
following commercial banks as Agent Banks: Equity Bank, Kenya Commercial Bank, National
Bank of Kenya and Co-operative Bank of Kenya.
v) The payment of CGT shall be made at the same time that payment for stamp duty on such
transfer is made;
vi) The transferor returns document with proof of payment to KRA.
vii) KRA stamps the document. Note that the form will serve as a pay-in-slip and receipt.

Transfers of property not deemed to be a transfer

The following are not deemed to be transfers for CGT purposes:

(a) Transfer of property between spouses or former spouses as part of a divorce
settlement;
(b) Transfer of property to secure a loan or debt;
(c) Issuance of shares or debentures by a Company;
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(d) Transfer of property by a personal representative to the beneficiary of owner;

(e) Compensation of property acquired by the government for infrastructure development
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Transfer of property exempt from CGT

There are transfers that are exempt from CGT including:

1. Transfer of property between two entities relating to incorporation, recapitalization,
acquisition, amalgamation, separation, dissolution, or similar restructuring transactions
which are deemed to be of public interest;
2. Gain on the transfer of private residence occupied continuously for a period of 3 years
prior to the transfer;
3. Transfer of land by an individual whose value does not exceed Kshs. 30,000;
4. Property transferred for purposes of administering the estate of a deceased person;
5. Transfer of agricultural property by an individual of less than 100 acres situated outside
a municipality of an urban area;

What happens when a loss is made?

The loss may be carried forward to be offset/deducted against a gain of a similar nature (that is,
a capital gain) at a future date.

Computation of Capital Gain Tax

Look at the Following Facts then Calculate the Capital Gain Tax

a) Sale and Incidental Cost Thereto

Sale Proceed- Ksh 2,000,000

Incidental Costs are as follows

1. Legal Cost- 100,000
2. Advertisement-50,000
3. Agents Commission-200,000
4. Valuation Fees-150,000

b) Cost of Acquisition and Construction

Acquisition and Construction-1,500,000

Incidental Costs
1. Legal Fees-60,000
2. Valuation -70,000
3. Changing the roof-130,000
4. Legal Cost Defending Title-50,000
5. IBD (over the years)-450,000

TASK-CALCULATE THE CGT FOR THIS TRANSFER

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1. First Calculate the Transfer Value

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Transfer Value = (Sales Proceed – Incidental Cost)

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Sale Proceed 2,000,000 (a)

Incidental Costs:
Legal Fees 100,000
Advertisement 50,000
Agents Commission 200,000
Valuation Fee 150,000
Total Incidental Cost 500,000 (b)
Transfer Value ( a-b) 1,500,000 (c )

2. Second Calculate the Adjusted Cost

Adjusted Cost = (Cost of Acquisition & Construction + Incidental Cost- IBD (over the years)

Acquisition and Construction 1,500,000 (d)

Incident Cost
Legal Fees 60,000
Valuation 70,000
Costs of Changing Roof 130,000
Legal Cost Defending Title 50,000
Total Incidental Cost 310,000 (e)
Total Cost of Acquisition and Incidentals ( d +e) 1,810,000 (f)

IBD 450,000 (g)

Adjusted Cost = (Cost of Acquisition & Construction + Incidental Cost- 1,360,000 (h)
IBD (over the years) i.e ( f-g)

3. Computation of CGT thereon

5% of (Transfer Value – Adjusted Cost)

5% of (c-h)

5% of (1,500,000-1,360,000)

5% of 140,000 = 7,000/= (CGT) 70

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REGISTRATION

The law of conveyancing serves the interests of the society when it is capable of not only
facilitating the transfer of land but also when it can provide security of title upon such a transfer.
As such, the reconciliation of security of title with ease of transfer is a central theme in
conveyancing.

What is Registration
Land Registration maybe defined as the keeping of public records of all transactions affecting
land.

Properties of a Good Land Registration System

An effective land registration system must be
(a) Accurate,Complete,Reliable and up to date
(b) It should cover all land i.e. urban, rural, public, and private and community without
distinction between them by way of registration.

Principles of Registration

A system of registration needs to be based on some principles and by far the most important
source from which these principles have been drawn is the so called Torrens System named
after Sir Richard Torrens who formulated the same in 1958 in South Australia from where it
later spread to other parts of the world.
Most jurisdictions embrace this system because of its demonstrable superiority over other
systems.
It is significant because it provides a new and improved information system on property in the
form of a register and the register contains all the material facts about a particular property.
Other than that, in such a register would be entered all such information so that they can be
accessed and a document of title would be issued to the owner upon such property changing
hands through subsequent transactions.
The document of title in respect of property would be surrendered to the new owner and the
information would be effected in the proper register so that the necessary changes can reflect
all the material details and indicate the true status as regards among other things ownership of
the property or any other interests which affect such ownership.
In effect it leads to a creation of a public record on property full of information of the kind that
would be of interest to anybody wishing to have any dealings in such property.
By creating a public record system there is the element of security of such a title or title
assurance which does offer a measure of protection to the person the bona fide purchaser
without notice who may wish to acquire such a property in future.
In contrast to an unregistered land system, there is no risks or uncertainties whatsoever as to
the ownership including whether there are claims acquired, whether it has been charged all
these things would be disclosed in the register.
There are guarantees that come with the registration since it is government maintained.
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The principles relating to the Torrens System; were drawn from the system which Torrens came
up with
1. The Indefeasibility Principle
This is to the effect that once registered as the owner of an interest and such
interest duly disclosed or entered in the register the rights acquired cannot be
defeated by any adverse claims which are not disclosed in the register.
The register is a public document and open for inspection by the public so that
the presumptive position is that everyone will be deemed to know.
Discoveries can be made of material details which would affect a person in one
way or another and it is good public policy that the openness allows you to
know any adverse interest before one goes very far with the transaction one
can seek explanations.
Once we’ve got all these guarantees, we shouldn’t allow them to be defeated by
any hidden claims and the registers should be open for anyone to see.
The idea of public notice provided for by keeping a policy of an open register
should work towards strengthening the rights of an individual with an interest.

2. The mirror principle

This relates to the accuracy or certainty or conclusiveness that entries in the
register in as far as the true status of the title are concerned.
We take whatever is found in the register as accurate and conclusive on what it
purports to inform us about; we expect to get all material details including true
position of ownership, the interests or other rights to which such ownership
could be subject.
The history of how this property has changed hands if at all the first time and at
any time changing hands might have taken place.
Mirror principle stands for transparency in shedding light on what the position is
and once we have accepted the principle there is the element of confidence and
assurance that we are not having any hidden factors or interests that may be
adverse to the interests of the parties concerned.

3. The Insurance Principle

This relates to the fact that since the state has undertaken to establish and
maintain this sort of system, the state by extension guarantees that there would
be indemnity offered to compensate anyone who may suffer loss as a result of
mistakes in the register or merely by reason of the fact of operating that system
itself that in event of injury or damage arising out of such circumstance, there is
a state run system that will compensate any person who suffers loss to the
extent of such loss.

4. The Curtain Principle

This relates to the requirement that the register should disclose precisely the
nature of the interests and who are the owners.
There should be no position of where one holds interests in a hidden way and
all trusts should not be kept in the register and where for instance land is
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registered on a trust it would be a requirement that such land should not be

held blindly under such a trust and must be registered in the names of specific
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persons and subject to appropriate restrictions the names of the owners being
registered.

Purpose of Registration

The change of rights to land from one person to another through a process of conveyancing is
facilitated by land registration.
Land Registration is necessary for several but distinct purposes

a) Land Tenure Security

In a modern society, land registration is a tool for protecting rights to improve land tenure
security.
The process is also a panacea for the protection of land rights, alleviation of poverty, economic
development, food security and land reforms.
Land Registration facilitates dealings in land in accordance with the prevailing social economic
and cultural circumstances e.g. For one to obtain credit by using land as a collateral, the
borrower’s right to the land must be clear and unambiguous; ownership of such rights can only
be demonstrated not by physical possession of the land but by registration of such rights at the
Ministry of lands.
Property rights must be formalized i.e. embodied in universally obtainable, standardized
instruments of exchange that are registered in particular land registries.
Security of tenure is guaranteed under Section 26 of the Land Registration Act

26. Certificate of title to be held as conclusive evidence of proprietorship.

1. The certificate of title issued by the Registrar upon registration, or to a purchaser of land upon a
transfer or transmission by the proprietor shall be taken by all courts as prima facie evidence
that the person named as proprietor of the land is the absolute and indefeasible owner, subject
to the encumbrances, easements, restrictions and conditions contained or endorsed in the
certificate, and the title of that proprietor shall not be subject to challenge, except—
(a) on the ground of fraud or misrepresentation to which the person is proved to be a
party; or
(b) where the certificate of title has been acquired illegally,unprocedurally or through a
corrupt scheme.
2. A certified copy of any registered instrument, signed by the Registrar and sealed with the Seal of
the Registrar, shall be received in evidence in the same manner as the original.

The care taken in admitting land data to be admitted in a new land system has a bearing on the
reliability of the new system; this necessitates the need to verify data of land transaction
individually.

b) Protection of Rights in Land

This point is analogous to the tenure security.
The assurance of continuing access to and use of land through a formalized tenure system.
The registration provides proof of ownership of rights to the land and real property as well as a
proof of the size and location of the immovable property.
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Land Registration questions the what,who,how,where and when the land is owned
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The underlying principle that enable land registration process protect the rights of the parties
concerned are the publicity of the transfer of interest in land, clarity, and lack of ambiguity in
the security of title.
Title to land properly so acquired forms the basis of loans when using the land collateral,
mortgages for land development and facilitates dealings in land thereby optimizing land use.

c) Facilitates Levying of Taxes

Land registration facilitates levying of Land Taxes by the Government.
In Kenya payment of land rent and stamp duty depends on the value of the land as quite often
revealed in the purchase price.
Land rate is charged on the basis of size and value of the land.
Aspects of the Land Registration such as size of land and proprietorship of land are therefore
quite instrumental in determining the amount of tax and the incidence of tax.

d) Enable Government to Control Use of Resource

Land registration enables the government to control the use of resources.
Land Planning is a government function which greatly relies on the registry system.
In agricultural controlled areas the government uses land registration systems to determine
economically viable land sizes and control transfers that could be uneconomically viable (See
Section 6 (1)) of the Land Control Act.
See also section 29 of the Physical Planning Act vests the County Government the power to
enact legislation to regulate zoning in respect to use and density of development.

e) Reduction of unnecessary litigation

The registered owner can transact or settle his land without the fear of being sued to challenge
his title because upon registration, he acquired an indefeasible title against the whole world.

f) Prevention of re-fragmentation of land

Registration helps to determine whether or not a particular piece of land can be sub-divided
because title details pertaining to the land e.g. acreage, will have been noted in the Register.

g) Efficient administration and facilitation of the loan system

Security of title which flows from registration makes it possible for property owners to obtain
loans from financial institutions.

h) Prevention of concealed dealings in land-

Registration gives publicity to land transactions.
Since the register is a public document and therefore open to the public, it is possible to
ascertain who owns what interest.

Types of Registration in Kenya

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There are two types of Registration in Kenya

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1. Registration of Titles
The register is the sole authoritative record wherein lies title to all registered plans.
It records the rights to clearly defined units of land as vested for the time being in some
particular person or body and limitations if any to which the rights are held.
The register is kept at the lands office, the central registry in the lands office.
The register refers to the official record containing details of ones estates, particulars of
the property and the interests that affect the property.
It would identify the nature of the Estate whether leasehold property or freehold or an
absolute estate and such records are described by reference to an official map plan that
is maintained at the registry.
The register can also be used in reference to the entire index of many individual
registers that comprise the sum total of all titles relating to registered land in the
country. In each case, the register has divisions or sections into which it is divided.
There are 3 main sections/parts, property section, proprietorship section and finally the
encumbrances section.

(a) The property section

Contains a section of the registered property and identifies such property by reference
to a map plan. Included in this section are details of the date of first registration of the
land.
It may also contain notes relating to any exemptions or other adverse interests to which
the property is subject.
In the case of registered lease or land there would also be particulars of the lease
including the title number and a statement to any prohibitions against alienation of such
property without authorisation.

(b) The proprietorship section

States the nature of the registered title, name and address and other description of the
registered proprietor, any restraint if at all to which is powers of disposition are subject.

(c) The encumbrances sections

Gives particulars of subsisting burdens to which the property is subject and any restrictions that
are endorsed and have the effect of preventing such dealings in the property as maybe
inconsistent with the restrictions imposed.

2. Registration of Deeds.

A Deed Registration is a record of an isolated transaction and is an evidence of its

legality.
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In a loose scenario where parties to an agreement deem that they intend to make public
their agreement they may approach the Registrar of Documents to record the
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This document is then registered in a Register of Deeds.

The registration of deed system entails maintenance of a public register in which
documents affecting interests in a particular registered land are copied.
A deed is merely evidentially of the recorded transaction and is by no means proof of
title.
The most that can be made out of a deed is to invoke the records as prima facie proof of
the fact that the transaction in question did occur.
It cannot and will not suffice to prove the validity or legitimacy of such transactions.
The deed does not even have to be consistent with any registered transaction which
may have previously taken place in connection with the property in question.
Consequently, it cannot confer any secure title to land in favour of the person in relation
to whom the registration of the deed has been executed.
Reliance on the deed system is as risky as reliance on the unregistered system as it
entails a historical deduction of the title in respect of the property in question.
There are no govt guarantee in regard to deeds and so there is no guarantee as to the
accuracy of entries and no indemnity would be available to take care of any loses arising
from omissions that may be disclosed in the register.

Registration of Documents in the New Land Legislations

Land Registration Act No.3 of 2012

1. The Land Registration Act achieves the purpose for which the Registered Land Act (Repealed)
was enancted.The PREAMBLE states that it is “AN ACT of Parliament to revise, consolidate and
rationalize the registration of titles to land, to give effect to the principles and objects of
devolved government in land registration, and for connected purposes.”

2. Section 12 of the Act tasks the Public Service Commission to appoint a Chief Land Registrar
,County Land Registrar, Land Registrars and other officers necessary to effectively discharge
function under the Act
12. Appointment of officers.
1. There shall be appointed by the Public Service Commission, a Chief Land Registrar, and such
other officers who shall be public officers as may be considered necessary for the effective
discharge of functions under this Act.
2. Any officer appointed under this Act shall be competitively recruited and vetted by the Public
Service Commission.

3. Under the provisions of Section 6 of the Act ,the National Land Commission is mandated by way
of Gazette
i. To constitute land registration units at county levels and any other levels to ensure
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reasonable access to land registration and administration services

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iii. To divide the registration sections into blocks and to designate distinctive numbers or
letters or a combination of letters and numbers to refer to a specific registration block
or section.

6. Registration units.
1. For the purposes of this Act, the Commission in consultation with national and county
governments may, by order in the Gazette, constitute an area or areas of land to be a land
registration unit and may at any time vary the limits of any such units.
2. Every registration unit shall be divided into registration sections, which shall be identified by
distinctive names, and may be further divided into blocks, which shall be given distinctive
numbers or letters or combinations of numbers and letters.
3. The parcels in each registration section or block shall be numbered consecutively, and the name
of the registration section and the number and letter of the block, if any, and the number of the
parcel shall together be a sufficient reference to any parcel.
4. The office or authority responsible for land survey may, at any time, cause registration sections or
blocks to be combined or divided, or cause their boundaries to be varied, and immediately inform
the Registrar of the changes.
5. Any order by the Commission under this section shall be published in the Gazette and in at least
two daily newspapers of nationwide circulation.
6. The land registration units shall be established at county level and at such other levels to ensure
reasonable access to land administration and registration services.

4. Further Sections 7 (1) (a) and 7 (1) (b) of the Act Mandate the NLC to determine the form of
land register to be maintained in each registration unit and to determine the date when land
plans are to be geo-referenced.

7. Land registry.
1. There shall be maintained, in each registration unit, a land registry in which there shall be kept—
(a) a land register, in the form to be determined by the Commission;
(b) the cadastral map;
(c) parcel files containing the instruments and documents that support subsisting entries in
the land register.
(d) any plans which shall, after a date appointed by the Commission, be geo-referenced;
(e) the presentation book, in which shall be kept a record of all applications numbered
consecutively in the order in which they are presented to the registry;
(f) an index, in alphabetical order, of the names of the proprietors; and
(g) a register and a file of powers of attorney.
2. The Registrar shall, upon payment of the prescribed fee, make information in the land registry
accessible to any person.
3. In establishing the land registry, the Public Service Commission and Cabinet Secretary, shall be
guided by the principles of devolution set out in Articles 174 and 175 of the Constitution.
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5. Section 8 of the Act enables the set of community land register in line with Article 63 of the
Constitution.
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8. Community Land Register.

1. Subject to the legislation on community land made pursuant to Article 63 of the Constitution,
there shall be maintained in each registration unit, a community land register in which shall be
kept—
(a) a cadastral map showing the extent of the community land and identified areas of
common interest;
(b) the name of the community identified in accordance with Article 63(1) of the Constitution
and any other law relating to community land;
(c) a register of members of the community;
(d) the user of the land;
(e) the identity of those members registered as group representatives;
(f) the names and identity of the members of the group; and
(g) any other requirement as shall be required under the law relating to community land.
2. The Registrar shall issue a certificate of title or certificate of lease in the prescribed form.
3. The Registrar shall not register any instrument purporting to dispose of rights or interest in
community land except in accordance with the law relating to community land.
4. For the avoidance of doubt the provisions in this section shall not apply to unregistered
community land held in trust by county governments on behalf of communities under Article
63(3) of the Constitution.

6. Section 9 illustrates the manner in which the Registrar will keep the record and Section 10 deals
with right of the public to have access to the register at least in electronic manner
9. Maintenance of documents.
1. The Registrar shall maintain the register and any document required to be kept under this Act in a
secure, accessible and reliable format including—
(a) publications, or any matter written, expressed, or inscribed on any substance by means of
letters, figures or marks, or by more than one of those means, that may be used for the
purpose of recording that matter;
(b) electronic files; and
(c) an integrated land resource register.
2. The register shall contain the following particulars—
(a) name, personal identification number, national identity card number, and address of the
proprietor;
(b) in the case of a body corporate, name, postal and physical address, certified copy of
certificate of incorporation, personal identification numbers and passport size
photographs of persons authorized and where necessary attesting the affixing of the
common seal;
(c) names and addresses of the previous proprietors;
(d) size, location, user and reference number of the parcel; and
(e) any other particulars as the Registrar may, from time to time,determine.
10. Public access to the register.
Subject to the Constitution and any other law regarding freedom of and access to information, the
Registrar shall make information in the register accessible to the public by electronic means or any other
means as the Chief Land Registrar may reasonably prescribe.
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7. Under the Provisions of Section 30 of the Act ,the Land Registrar is enjoined to issue ,upon
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i. A Certificate of Title in respect to Freehold Interest. OR

ii. A Certificate of Lease in respect to Leasehold interest exceeding 25 years

30. Certificate of title and Certificate of lease.

1. The Registrar may, if requested by a proprietor of land or a lease where no certificate of title or
certificate of lease has been issued, issue to him or her a certificate of title or a certificate of
lease, as the case may be, in the prescribed form showing, if so required by the proprietor, all
subsisting entries in the register affecting that land or lease.
2. Notwithstanding subsection (1)—
(a) only one certificate of title or certificate of lease shall be issued in respect of each parcel
or lease; and
(b) no certificate of title or certificate of lease shall be issued unless the lease is for a certain
period exceeding twenty-five years.
3. A certificate of title or certificate of lease shall be prima facie evidence of the matters shown in
the certificate, and the land or lease shall be subject to all entries in the register.
4. If there is more than one proprietor, unless they are tenants in common, the proprietors shall
agree among themselves on which of them shall receive the certificate of title or the certificate of
lease, and if they fail to agree, the certificate of title or the certificate of lease shall be filed in the
registry.
5. The date of issue of a certificate of title or certificate of lease shall be noted in the register.

8. Part XII of the Act deals with Transitional aspects from the old land laws such that
(a) Title Documents issued under the provisions of the Registered Land Act (Repealed) or
the Registration of Titles Act (Repealed) are deemed to be Certificate of Title or
Certificate of Lease as the case may be.
(b) The Registers previously kept under the Registered Land Act (Repealed) or Registration
of Titles Act (Repealed) are deemed to be registers required to be kept under Land
registration Act.
(c) Title to parcels of land kept under the Government Lands Act (Repealed) and Land Titles
Act (Repealed) are required to be promptly examined and their particulars noted in a
register. The register is then enjoined to notify the proprietor of such parcel of land of
the intention to register the proprietorship and upon request by the proprietor, issue
the Proprietor with a Certificate of Title or Certificate of lease as the case may be over
the land.

NB: It should be remembered that the registration systems under the Government Lands Act (Repealed)
and Land Titles Act (Repealed) were deed systems of registration. Thus the Land Registration Act seeks
to do away with the deed system of registering land and reinforce exclusively the title system of
registration. (See Section 104 and 105 of the Land Registration Act)
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PART XII—SAVINGS AND TRANSITION

104. Saving registers under repealed laws.
1. A register maintained under any of the repealed Acts shall, on the commencement of this Act, be
deemed to be the land register for the corresponding registration unit established under this Act.
2. Upon receiving an adjudication register from the Director of Land Adjudication, the Registrar shall
forward it to the Deputy Registrar or Registrar in charge of the registration unit concerned, who
shall prepare a register for each person shown in the adjudication record as an owner of land, and
every person shown in the adjudication record as being entitled to an interest that does not amount
to ownership of land shall be registered as being so entitled, subject, in every case to, any
restriction of the power of the proprietor or of any person so entitled to deal with the land and to
any interest, lease, right of occupation, charge or encumbrance affecting the land.
105. Transiting title documents.
1. On the effective date, the following provisions shall apply in respect of every parcel of land, the title
to land which is already registered under the repealed Acts—
(a) if the title to a parcel of land is comprised in a grant or certificate of title registered under
the repealed Registered Land Act—
i. the grant or certificate of title shall be deemed to be a certificate of title or
certificate of lease, as the case may be, issued under this Act; and
ii. the folio of the register of titles kept under the repealed Act shall be deemed to
be the register under this Act: Provided that the Registrar may at any time
prepare a register, in the prescribed form, showing all subsisting particulars
contained in or endorsed on the folio of the register of titles and substitute such
register for such folio and issue to the proprietor a certificate of title or certificate
of lease, as the case may be, in the prescribed form.
(b) if the title to the parcel is comprised in a grant or certificate of title registered under the
repealed Registration of Titles Act"
i. the grant or certificate of title shall be deemed to be a certificate of title or
certificate of lease, as the case may be, issued under this Act; and
ii. the folio of the register of titles kept under section 7 of the repealed Registration
of Titles Act shall be deemed to be the register under this Act: Provided that the
Registrar may at any time prepare a register, in the prescribed form, showing all
subsisting particulars contained in or endorsed on the folio of the register of
titles kept as aforesaid and substitute such register for such folio and issue to the
proprietor a certificate of title or certificate of lease, as the case may be, in the
prescribed form.
(c) if the title to the parcel is comprised in a register kept under the repealed Government
Lands Act or the repealed Land Titles Act, the Registrar shall—
i. as soon as conveniently possible, cause the title to be examined;
ii. prepare a register, in the prescribed form, showing all subsisting particulars
affecting the parcel which are capable of registration under this Act;
iii. serve on the proprietor and on the proprietor of any lease or charge, a notice of
intention to register; and
iv. issue to the proprietor, upon request, a certificate of title or certificate of lease in
the prescribed form;
2. In compiling register in the name of the county or national government in trust for the people
resident in the county or the people of Kenya, as the case may be, all public land in the area.
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3. Upon the registration of the Commission as proprietor of any land under subsection (2), there
shall also vest in the Commission all rights, powers and liabilities under any grant or lease then
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(d) The Land Registration Act (See Section 106 and 107) and The Land Act (See Section
162) also recognize and preserve any rights, liabilities and remedies acquired, imposed
or exercisable under the Registered Land Act (Repealed),Government Land Act
(Repealed),Land Titles Act (Repealed) and the Registration of Titles Act (Repealed)

106. Transitional provisions on rights, liabilities and remedies of parties over land.
1. On the effective date, the repealed Acts shall cease to apply to a parcel of land to which this Act
applies.
2. Nothing in this Act shall affect the rights, liabilities and remedies of the parties under any
mortgage, charge, memorandum of equitable mortgage, memorandum of charge by deposit of
title or lease that, immediately before the registration under this Act of the land affected, was
registered under any of the repealed Acts.
3. For the avoidance of doubt—
(a) any rights, liabilities and remedies shall be exercisable and enforceable in accordance
with the law that was applicable to the parcel immediately before the registration of the
land under this Act; and
(b) the memorandum of equitable mortgage or memorandum of charge by deposit of title
may be discharged by the execution of a discharge in the form prescribed under the Act
under which the memorandum was first registered.
4. Notwithstanding this section, any notice in writing required to be served under the repealed Acts
upon any of the parties under any mortgage, charge, memorandum of equitable mortgage or
memorandum of charge by deposit of title may be served in accordance with this Act, and such
service shall be deemed to be effective for all purposes.
107.Savings and transitional provisions with respect to rights, actions, dispositions
1. Unless the contrary is specifically provided for in this Act, any right, interest, title, power, or
obligation acquired, accrued, established, coming into force or exercisable before the
commencement of this Act shall continue to be governed by the law applicable to it immediately
prior to the commencement of this Act.
2. Unless the contrary is specifically provided for in this Act or the circumstances are such that the
contrary must be presumed to be the case, where any step has been taken to create, acquire,
assign, transfer, or otherwise execute a disposition, any such transaction shall be continued in
accordance with the law applicable to it immediately prior to the commencement of this Act.
3. For the avoidance of doubt, any lease granted to a noncitizen shall not exceed ninety-nine years.
4. An instrument executed before the commencement of this Act whereby any disposition
permitted under this Act is completed may be presented for registration in the prescribed register
and"
(a) the question whether any instrument so presented is to be registered shall be
determined by the Registrar by reference to the law in force at the time of its execution;
and
(b) subject to the provisions of paragraph (a), the provisions of this Act shall apply to that
instrument as if it had been executed after the commencement of this Act.
5. If any step has been taken to forfeit a lease or to foreclose a charge before the effective date, a
court may, if it considers it just and reasonable so to do, on and after the effective date, on the
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application of the lessee or, as the case may be, the borrower to issue an injunction to the lessor
or, as the case may be, the borrower to issue an injunction to the lessor or, as the case may be,
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under this subsection, the lessor or lender to whom the injunction has been issued may
commence any action under this Act to terminate that lease or bring that charge to an end.
LAND ACT

162. Savings and transitional provisions with respect to rights, actions, dispositions etc.
1. Unless the contrary is specifically provided in this Act, any right, interest, title, power, or
obligation acquired, accrued, established, coming into force or exercisable before the
commencement of this Act shall continue to be governed by the law applicable to it immediately
prior to the commencement of this Act.
2. Unless the contrary is specifically provided in this Act or the circumstances are such that the
contrary must be presumed, if any step has been taken to create, acquire, assign, transfer, or
otherwise execute a disposition, any such transaction shall be continued in accordance with the
law applicable to it immediately prior to the commencement of this Act.
3. Any instrument executed before the commencement of this Act whereby any disposition
permitted under this Act is completed may be presented for registration in the prescribed register
and—
(a) the question whether any instrument so presented is to be registered shall be
determined by the Registrar by reference to the law in force at the time of its execution;
and
(b) Subject to the provisions of paragraph (a), the provisions of this Act shall apply to that
instrument as if it had been executed after the commencement of this Act.
4. If a lessor or lender had initiated any steps to forfeit a lease or to foreclose a charge, as the case
may be, before the commencement of this Act, a court may on the application of the lessee or
the chargor issue an injunction to the lessor or,to the lender to stop the continuation of any such
step.
5. If a court had issued an injunction under subsection (4), the lessor or lender to whom the
injunction has been issued may commence any action under this Act to terminate that lease or
bring that charge to an end.

What is Registered
Land will always belong to the government (hence the doctrine of bona vacantia).
It is not the land that is registered as this is done once the grant is issued. It is an interest, or the
liability of a duty that is registered.
These interests include:

1. An Allodium

This is the highest interest in land after the land itself. This describes a situation where real
property is owned free and clears of any encumbrances including liens, taxes or charges.
The Crown is prohibited from interfering with such land.
This is found in some states like Italy (the Vatican i.e. ecclesiastical states.
Note that after the 9-11 terror attack, the US enacted The US Patriots Act entitling the state to
acquire any land.
Therefore an allodium no longer exists in the US.
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2. The Fee Simple

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Previously, one could only acquire certain parcels of land under the feudal system and one could
not bequeath land to anyone but after LPA 1925 you could pass land to anyone.
Thus fee simple was introduced. It is found in Kenya. Anybody can own the land.
The Government has some restrictions, not only in the use of land but may also levy taxes on
the parcel of land.
The land is owned without the Government interest interfering until there is nobody to inherit.
The doctrine of bona vacantia will apply and the land will revert to the state.

3. Leasehold

This is an interest for a specific term where the grantee and the lessee are given the property to
own and possess exclusively at a premium for the determined term.
Leasehold can create leasehold (sub-lease) or the leasehold may also be created from a
freehold.

4. Interests of Third Parties as against registered proprietors.

These are either encumbrances and or servitudes.

Encumbrances are created by the registered proprietor in favour of a third party which results in
the registered proprietor’s rights being limited e.g.
A charge requires the consent of the third party before transferring, inhibitions and restrictions
are also encumbrances.
Servitudes are not necessarily created by the registered proprietor on their own parcels of land.
They are created for the interest of third parties on others parcels of land e.g. easements and
restrictive covenants. Easements could be created by statute.

Process of Registration
1. Registration of any document affecting interest in land begins by filling valuation forms for
purposes of determining stamp duty payable. See Section 46 of Land Registration Act and
Section 5 of the Stamp duty Act.
2. For the purposes of calculating Capital Gain Tax the conveyance shall fill valuation forms ,while
KRA fills Valuation for Stamp Duty Requisition Form .
3. KRA then sends the forms to the Chief Government Valuer for ascertainment of duty payable.
See Section 10A of the Stamp Duty Act.

10A.Valuation by Government Valuer.

1. The Collector of Stamp Duties shall refer to the Chief Government Valuer any conveyance or
transfer on sale of any immovable property before or after registration of the relevant
instruments in order to determine the true open market value of such property as at the date of
the conveyance or transfer for purposes of ascertaining whether any additional stamp duty is
payable.
2. The Collector shall immediately demand by written notice to the purchaser or transferee or his
authorized agent the payment of any additional stamp duty that may become payable after the
valuation has been effected under subsection (1), and such payment shall be made within
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twenty-one days from the date of posting of the notice.

3. The Collector shall cause caveats or restrictions, as the case may be, to be registered against the
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additional stamp duty becomes due and payable.

4. The provisions of this section shall also apply to gifts inter vivos under section 52(1) and to
partitions under section 71(1) and (2).

4. Once the duty payable is ascertained to be correct, the document to be registered is stamped
and the correct duty paid before it can be lodged for registration.
5. Once the document is presented for registration, the document is given a day book number and
the day book number is entered into the relevant register. (NB: The day book number records
the date and time that the document is presented for registration).
6. The day book number is endorsed on the document for purposes of priority.i.e It is the order of
presentation of the registration and not when the document was executed (Registration gives
one an absolute interest subject to any registration lodged prior to that registration. I.e. the
doctrine of priority, documents are ranked according to the time they were booked for
registration. The interest is made subject to the existing encumbrances.)
7. Once the day book number is endorsed on the document, the document is taken to the audit
and Government auditor to ascertain that stamp duty and other applicable taxes such as land
rent, land rates have been paid and the necessary consents are obtained in respect to the
transaction.
8. The document is then left for matching with Deed or Title file from the strongroom.
9. Once the registration document is matched ,the Registry –in-Charge marks the document for
action in a register known as the “A” Book.
10. The first action entails verification of the registration document by an officer in the registry with
a view to detecting any defects in the document.
11. The title is then inspected by an officer in the registry to ensure that the title is clear and that
the registration can proceed.
12. Once it is ascertained that the title is clear, the particulars of interest being acquired are then
entered into the “A” Book.
13. The registration document is then passed to the Registrar for execution and ultimate
registration.
14. The Registrar vets the document once more and either signs it or rejects it.
15. If the Registrar approves of the document and signs it, the document is photocopied, sealed and
released to the owner.

EFFECTS OF REGISTRATION

1. Absolute Ownership
The registration of a person as the proprietor of land shall vest in that person the absolute
ownership of that land together with all rights and privileges belonging or appurtenant thereto;
(See Section 24 (a) same reading)
And for a lease the registration of a person as the proprietor of a lease shall vest in that person
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the leasehold interest described in the lease, together with all implied and expressed rights and
privileges belonging or appurtenant thereto and subject to all implied or expressed agreements,
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2. Indefeasible Rights to the Proprietor

The rights of a proprietor, whether acquired on first registration or subsequently for valuable
consideration or by an order of court, shall not be liable to be defeated except as provided in
this Act, and shall be held by the proprietor, together with all privileges and appurtenances
belonging thereto, free from all other interests and claims whatsoever (only subject to third
party rights e.g encumbrances and overriding interests).(See Section 25 (1) same reading)

3. Certificate of title to be held as conclusive evidence of proprietorship

The certificate of title issued by the Registrar upon registration, or to a purchaser of land upon a
transfer or transmission by the proprietor shall be taken by all courts as prima facie evidence
that the person named as proprietor of the land is the absolute and indefeasible owner, subject
to the encumbrances, easements, restrictions and conditions contained or endorsed in the
certificate, and the title of that proprietor shall not be subject to challenge, except where it has
been acquired fraudulently or illegally.(See Section 26 same reading)

4. Transfer without valuable Consideration

A transfer registered without valuable consideration; the transfer when registered, shall have
the same effect as a transfer for valuable consideration.

LIMITATION OF REGISTRATION

1. Registration is subject to existing registered or to be registered interests through the Doctrine of

Priority in the form of encumbrances, leases charges and other encumbrances and to the
conditions and restrictions (if any) shown in the register or ranking of priorities: See Section 26
(1) above.

2. Overriding interests i.e. Interests to which a registered title is subject, even though they do not
appear in the register. They are binding both in the registered proprietor and on a person who
acquires an interest in the property:(See Section 28 of the Act).See the following cases

National Prov. Bank Limited v Hastings (1964)1 All ER [overriding interest]

A husband deserted his wife but left her in occupation of the house and later mortgaged that house to a
bank which never made inquiries of the wife as to her rights viz the house. When the husband failed to
pay the charge the bank sought to possess the house but was met with a suit from the wife.

The court held that the right of a deserted wife in actual occupation to remain in the matrimonial home
was an overriding interest within s 70(1)(g) of the Land Registration Act, 1925, save where enquiry was
made of her and her rights were not disclosed; in the present case enquiry had not been made of the wife
and thus the bank’s mortgage was subject to her entitlement to remain in the matrimonial home.
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Lord Denning MR. put it in these words:

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to remain in occupation is a right within s 70(1)(g) and is an overriding interest, available

against all successors, save where enquiry is made of her, and her rights are not disclosed. So
far as unregistered land is concerned, it is a right to be in actual occupation, and it is available
against all successors except purchasers for value without notice. This difference between
registered and unregistered land is inevitable. It is the result of the statutes; and applies to all
rights of a person in actual occupation of land. In cases such as the present there is very little
difference in the result; because anyone who is buying a dwelling-house, or lending money on
the security of it, ought reasonably to make enquiries of who is in actual occupation of the
house and on what terms. The enquiry will, of course, usually be made of the husband who is
selling or mortgaging it. He will presumably tell the truth; but, in order to be quite safe, it
should be followed up at the house itself. If the purchaser makes no enquiry, he takes his
chance and is bound by the rights of whomsoever is in actual occupation.

In the words of Lord Kingsdown in Barnhart v Greenshields((1853), 9 Moo PCC at pp 32, 33):

“The possession of the tenant [and, I would add, the possession of the person in actual
occupation] is notice that he has some interest in the land, and a purchaser having
notice of that fact, is bound, according to the ordinary rule, either to enquire what
that interest is, or to give effect to it, whatever it may be.”’

Mbui v Mbui EA 2005 256

Where the court of appeal stated that registration does not extinguish customary law rights. In this case,
the son who had been in occupation of the land sued his father who was trying to stop him from
transferring 2 parcels of land registered in his father’s name under the RLA. His case was dismissed but he
continued occupying the land. His father sought to evict him on the basis that his son had threatened him.
He also appealed on the basis of being the registered owner of an absolute and indefeasible title. His son
argued that he was entitled to the land as a birthright under Kamba customary law.

The court held in dismissing the appeal that the father’s right although absolute was still subject to the
rights and encumbrances noted in the register. It also held that such right was subject to overriding
interests, which included customary law rights giving rise to a trust that arose from the son’s continued
occupation of the land.
Barclays Bank v O’Brien
Which held that in mortgages, if the wife does not obtain independent legal advice, then an issue as
to the validity of the mortgage arises? She can lay claim to the property.

Esiroyo v. Esiroyo and Another

The courts applied S 28 and 30 of the RLA to hold that rights under customary law are extinguished upon
registration of land under that Act and further that they are not among the interests listed in S30 as
over-riding interests.

Obiero v. Opiyo and others [1972] E.A 227-

Held that the respondent had rights against the appellant stemming from possession and occupation of
part of the land, which amounted to an over-riding interest not required to be noted on the register and
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the appellants proprietorship was subject to it under S30 (g).

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EFFECTS OF NON-REGISTRATION

1. Non-registration makes the instrument void. See Section 43 (2)

No instrument effecting any disposition of private land under this Act shall operate to sell or
assign land or create, transfer or otherwise affect any land, lease or charge until it has been
registered in accordance with the laws relating to the registration of instruments affecting the
land in respect of which the disposition has been made.

43. Instruments of dispositions.

1. Every instrument effecting a disposition of land under this Act shall be in the form prescribed in
relation to that disposition under this Act or any other written law.
2. No instrument effecting any disposition of private land under this Act shall operate to sell or
assign land or create, transfer or otherwise affect any land, lease or charge until it has been
registered in accordance with the laws relating to the registration of instruments affecting the
land in respect of which the disposition has been made.
3. The provisions of subsection (2), shall not apply to any disposition that is exempt from
registration.
4. This section shall not apply to or affect the operation of any contract for a disposition under this
Act

See Merali v. Parker 29 KLR 26

Merali v. Parker 29 KLR 26

Plaintiff agreed to sub-let the plot to the defendant for two years. This agreement was verbal. Held

i. Plaintiff could not establish a tenancy for more than 1 year but S106 ITPA does not prevent the
plaintiff from establishing a tenancy for 1 year.
ii. If the effect is that while evidence cannot be given to prove a lease for more than 1 year, evidence
can be given to prove an agreement for a lease and the effect of that agreement is to create a
lease for 1 year only.

2. Interest cannot pass

The proprietor’s rights in rem remain unsecured if there is no registration. This would apply
to charges.
It makes the disposition ineffectual and in valid
See Section 36 of the Act

36. Dispositions and dealings affecting land.

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1. A lease, charge or interest in land shall not be disposed of or dealt with except in accordance
with this Act, and any attempt to dispose of any lease, charge or interest in land otherwise than
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in accordance with this Act or any other law, shall not, extinguish, transfer, vary or affect any
right or interest in that land, or in the land, lease or charge.
2. Nothing in this section shall be construed as preventing any unregistered instrument from
operating as a contract.
3. The Cabinet Secretary may prescribe terms and conditions of sale, which––
(a) shall apply to contracts by correspondence, subject to any modification or any
stipulation or any intention to the contrary expressed in the correspondence; and
(b) may be made to apply to any other cases for which the terms and conditions are made
available, where express reference is made to those terms and conditions.
4. Subject to Article 67(2)(c) of the Constitution, the Cabinet Secretary shall make regulations
prescribing the time within which instruments presented for registration must be registered
and providing for the supervision of the registration process to achieve the objectives of
efficiency, transparency and good governance.

See the following cases

Rogan Kamper v Grovenor [1977] KLR 123

Where Grovenor attempted to rely on a clause on a draft registered lease. Rogan Kamper said
since it was not registered it was not applicable. It was held the unregistered lease operated as a
lease inter partes but not against a 3rd party. Therefore specific performance was ordered.

The court held that an unregistered lease is not effectual in transferring an interest in land. The court
however took cognizance of the fact that any such agreement is valid as a contract. Platt J said that:

“The agreement, though executory as far as the intended lease is concerned, may be used
in proper circumstances to support a suit for specific performance; and according to Souza
Figueiredo’s case the covenant to pay rent contained in the agreement may be looked at
as a contractual stipulation.

But it seems to me that the other terms of the agreement relating to the future lease can
only be relied upon in connection with specific performance. That is the extent of the
contract operating ‘inter partes’.”

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PARTS OF A TITLE

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LECTURE 5: FRIDAY 8-22 APRIL 2016- MORNING SESSION (LECTURE HALL A)

TOPIC 5: THE PRE-CONTRACT PERIOD

This is a journey through the period before the execution of the contract. The role and duties of
the lawyer is explored with emphasis on sale of land.
The student -should demonstrate that acting on the client’s instructions he or she will identify
the client’s goals ;
The student should be able to advise the client from the point of view of a seller, a buyer ,a
mortgagor, a mortgagee, a lessor, a lessee.
Distinction is to be made between an Advocate qua Advocate and an Advocate qua negotiator:
“The Advocate is never the client”.
Role of other parties to a conveyancing transaction is also discussed specially of Surveyors,
Planners, Architects, Valuers, Estate Agents, e.t.c
The student must appreciate the necessity for a good working relationship with the client and
the need to instill confidence in the client as to his capabilities as a conveyancer.
The student should be able to undertake proper due diligence in a transaction

THE INITIAL CLIENT INTERVIEW

The first interview is the foundation of the transaction.

Good interviewing techniques are important in a full understanding of the facts in the
transaction and boost a relationship of mutual trust and confidence.
Remember the conveyancer’s overall duty is to advise the client, investigate the title and draft
the conveyancing document(s). Much of the success in these duties depends on the level of
interaction with the client.
The purpose of this initial interview is to source for information and get proper instructions.
Allow the client to talk and listen to them.

TO ADVICE

The nature of the advise you offer the client must be independent- See BBK PLC Vs. O’Brien
(1994) 1ALL ER
Explain the entire purpose of the transaction
Confirm they have understood
Give them a choice
Discuss conflict of interest- weigh the interests of both parties :See Mortgage Express Ltd. Vs.
Bowerman and Partners (1996) ALL ER 836
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INTERVIEW DON’TS
Legal peg-holes- rushing to a preliminary view of what is important and concentrating all efforts
on a narrow view;
Meeting and greeting- forgotten by most;
What the client wants- some lawyers complain that they can’t tell what the client wants;
Legalese-avoid using jargon
Client agreement- some do not check that the client agrees with the proposed plan of action
Questioning- cross examining a client as though in a witness box
Effective listening

DIFFERENT STAGES OF CLIENT INTERVIEW

STAGE TASK
Listening Greet, sit and introduce
Elicit facts with open questions
Listen carefully to basic outline of data

Questioning Question on facts for gaps, depth, background, ambiguities

and relevance
Sum up and recount your view of facts and check for client
agreement/ amend where necessary

Advising State Advise and/or plan of action and check for client
agreement(advise should be independent Cf. BBk PlcVs
O’brien 1994 All ER, Royal Bank of Scotland Vs. Etridge 2001,
4 All ER 449)

Recount follow up work to be done by the client

Recount follow up work to be done by the lawyer
State next contact date, venue and time
Ask if “any other business”
Advise on fees and conclude the interview

IMPORTANT DATA TO BE COLLECTED

The information needed includes:

i. Details of the parties i.e. particulars like names, addresses, telephone
ii. The property; who owns it, is it jointly owned, are they joint buyers etc. Give proper
advice in a situation of joint proprietorship and ownership in common including the
effects of this. Tell your clients about the interest held .i.e. if it is a leasehold, the residue
of the term left and the probability of extension etc. Also give proper advice if land is
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owned by both a wife and a husband, e.g. On rights of survivorship etc.

iii. Details of the proposed conveyance i.e. the plot itself, the fixtures and fittings, if they
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iv. Authorization to disclose details and information about other related transactions.
v. Mortgage Express Ltd Vs. Bowerman and Partners 1996 All ER 836
vi. Details on pre-contract responsibilities such as consents, clearances etc if acting for
seller;
vii. Details on financing, deposit, stamp duty, undertakings
viii. Details on title documents- obtain copies
ix. Discuss the possibility of there being a conflict of interest, for instance if you are acting
for both parties. Clients must agree to waive their right to representation? If a dispute
arises.

At the initial client interview, you also want to take details regarding the financial implications of
the conveyancing transaction e.g.
If a sale transaction, whether the client has the 10% or whether he can get it within the
period stipulated.
Whether your client is obtaining a mortgage to finance the purchase.
Stamp duty payable.
An advocate must always discuss his legal fees at the initial client interview. It is
advisable to discuss this last after setting or advising the client.
An advocate must ask for a copy of the title documents at the initial client interview.
You may also discuss any other miscellaneous issues.
Follow up the interview with a letter confirming the instructions as well as the details of
the interview.
One must also confirm fees but at an approximate value.

CAN ONE ACT FOR BOTH PARTIES

In conveyancing it is never advisable to act for both parties. You ought to discuss with the client
whether you are authorized to disclose details and information about the transaction itself and
related details e.g. existence of a mortgage or source of finance to a third party.
One may need to disclose in order to expedite the transaction. Authority should be sought prior
to this disclosure.
One may disclose information that is beneficial to the other party and detrimental to your client
e.g. property costs one million yet the borrower borrows two million. Disclosure in this case may
lead to the advances being cancelled. See Mortgage Express Ltd v Bowerman and Partners
(1996) 2 All ER 836

Mortgage Express Ltd v Bowerman and Partners (1996) 2 All ER 836

If you are acting in a conveyancing transaction and you come upon information that may jeopardize one
party, then as an advocate you are under an obligation to disclose such information. An advocate acted
for both the lender and borrower in a mortgage transaction. He became aware that the borrower was
buying the property from a party who was acquiring simultaneously with selling it but at a significantly
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reduced price.
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The borrower defaulted and upon foreclosure, fetched a very low price. The bank sued the advocate for

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negligence and breach of duty. The advocate was held liable. Sir Thomas stated as follows:
“Where a solicitor acting for a purchaser and lender receives information common to both. The question
whether he should pass it to one of the clients or other or both or neither, depends on the
relevant interest of each client which the solicitor engaged to serve.”

PARTIES TO A TRANSACTION

TRANSACTION PARTIES TO THE TRANSACTION

BUYING AND SELLING VENDOR (SELLER) PURCHASER (BUYER)
Person selling or intending to Person buying land or lease.
sell or transfer land or lease.

MORTGAGE MORTGAGOR MORTGAGEE

Disposition of interest in land Person creating a Mortgage in Holder of a Mortgage.
as security for a debt. favour of the Lender.

LEASE LESSOR LESSEE

Interest in land for a fixed term Person giving a lease. Person taking a lease
or period.

CHARGE CHARGOR CHARGEE

Species of security that confers Person creating a Charge in Holder of a Charge.
no interest in land but favour of a Chargee.
gives property charged as
security.

POWER OF ATTORNEY

A power of attorney is an instrument by which a person appoints another to act for him in any
matter, including the dispositions of interests in land.
It may be general or specific.
i. A general power of attorney will confer on the attorney authority to do on behalf of the donor
anything which he can lawfully do by an attorney.
ii. Specific power of attorney If the donor does not wish to give his attorney a general power, he
may care to limit the attorney’s activities to specific areas of his property and affairs

The person appointing is known as the principal or donor.

The person appointed is referred to as the donee.

ELEMENTS OF A POWER OF ATTORNEY

a) Consent
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The consent of the registered proprietor’s spouse is a requirement when Power of Attorney is
created.
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b) Capacity
Parties, the donor and the donee must have capacity. Capacity in this case entails two
ingredients; mental capacity and age.
c) Mental Capacity
Lunatics are generally not allowed to create powers of attorney except when they are in lucid
moments.
The Mental Treatment Act Cap 248 Laws of Kenya however, makes provision for a close relative
to apply to manage the property of an insane person without a power of attorney.In the case of
Grace Wanjiru Munyinyi v. Gideon Waweru, Civil Case Number 116 of 2002. Kimaru J. held that
a power of attorney was null if it was donated by a person of unsound mind.
d) Age
Both parties – the donor and the done – should have attained the age of majority, which is 18
years, as stipulated in the Age of Majority Act. Cap 33 Laws of Kenya.
e) Writing
A power of attorney must be in writing for it to be valid.
f) Ownership
Ownership of the subject matter must lie with the donor otherwise the power of attorney will
be invalid.
g) Legality
One cannot donate a right or responsibility that is prohibited by the law.
h) Execution
The donor must execute the document by signing it, failure to which will lead to the invalidity of
the power of attorney. To give full effect to a power of attorney it is necessary to register it at
the relevant registry pursuant to the Section 48 of the Land Registration Act.

48. Agents and persons under disability.

1. Except as provided in subsection (3), no instrument executed by any person as agent for any
other person shall be accepted by the Registrar unless the person executing it was authorized in
that behalf by a power of attorney executed and verified in accordance with section 45.
2. The original of a power of attorney or, with the consent of the Registrar, a copy certified by the
Registrar shall be filed.
3. The guardian of a person under a legal incapacity or, if there is no such guardian, a person
appointed under some written law to represent that person, may make an application, do any
act and be party to any proceeding on behalf of that person, and may generally represent that
person for the purposes of this Act.
4. Before accepting a document executed by a guardian or other person so appointed to represent
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a person under a legal incapacity, the Registrar shall—

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b) require the production of the appointing instrument of the person, and shall file a note of the
explanation to that effect.

This point was emphatically stated by the Court of Appeal in the case of Mayfair Holdings Ltd v
Ahmed. [1990] KLR 667.

Mayfair Holdings Ltd v Ahmed. [1990] KLR 667.

In this case , a power of attorney prepared under the English Power of Attorney Act of 1971 was held to
be unenforceable for lack of verification and certificate prescribed under section 110 (4) as read with
section 116 of the Kenyan RLA.

REVOCATION OF A POWER OF ATTORNEY

The power of attorney once revoked operates to terminate the relationship and obligations of
agency between the parties.
The Power of Attorney being an agency relationship follows the general principles applied in
terminating an agency.
They include issuing of due notice that the authority has been revoked, a right to sue for loss
and damages for fundamental breach of contract; and the principal notifying his clients and
employees that the authority has been terminated.
In the case of Ishengoma v National Insurance Corporation Ltd., [2001] 1 EA 75 the court held
that it is the duty of the principal to notify his clients and employees that the authority has been
terminated.
Generally a power of attorney can be revoked by the following ways;
i) Voluntary Revocation
This is done by;
a) the donor issuing a notice of revocation;
b) by the agent renouncing his authority;
c) by mutual consent of both parties.

ii) Revocation by Operation of Law

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General principles of law provide that under the following scenarios a power of attorney will be
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a) Death of either party;

b) Bankruptcy of either party;
c) Lapse of time;
d) Completion of transaction;
e) The agency becomes unlawful or impossibility;
f) Disability of either party making it impossible to enforce.

iii) Statutory Revocation of the Power of Attorney in Kenya

Kenyan laws give parties to agency relationships wide latitude in not only creating but also in
bringing their relationship to an end.
The donor may generally revoke the authority at any time. In the case of McConnell and
another v Kimani [1967] EA 702 the court found that a gratuitous power of attorney may be
cancelled by the donor orally or by conduct.
These laws are equivocal on the need to have powers of attorney registered even when the
authority is terminated. This rule applies even to a body corporate.
The Law of Contract Act requires that the power of attorney be registered hence it is presumed
that a revoked authority must also be registered. See Section 3(6)(a) Law of Contract Act, Cap
23,
A revoked authority is registered for the purpose of informing the public that the agency has
concluded. The public is therefore protected from relying on the agency to transact with the
donee.

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SAMPLE GENERAL POWER OF ATTORNEY

POWER OF ATTORNEY

-TO-

SSSSSSS

I, CCCCCC of Post Office Box Number MMM Gab, Botswana HEREBY APPOINT my son SSSSSSSS of Post

Office Box Number 60161 Gaborone, Botswana AS MY TRUE AND LAWFUL ATTORNEY for and in my

name to manage, transact and generally conduct all lawful business, act or activity on my behalf and in may

name without any reference to me AND without prejudice to the generality of the foregoing to sign, attend

and otherwise participate on my behalf and in my name (in so far as my signature attendance or

participation would be requisite) all documents, correspondence, meetings and other activities relating to:

(a) ordinary correspondence, checks and other bills of exchange;

(b) hiring, leasing, transferring and mortgaging of any of my property;

(c) taking of leases and mortgages by myself;

(d) opening and maintenance of any type of account with any bank or financial institution;

(e) recovery of any and all moneys, debts or property due and owed to myself;

(f) taking delivery of letters, telegraphic messages, drafts, packages and securities of any kind, from

the Post Offices or from Railway, Airline, Express or Steamship companies against the necessary

receipt and discharge signature;

(g) procurement of insurance against fire, marine or other risks to any of my property, or in which I

may be concerned or have or represent any interest;

(h) registration of deeds and other documents and these presents and payment of any and all taxes,

fees or other governmental charges on my behalf determined by law;

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(i) attachment and distress;

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(j) probate and administration of debtors’ estates;

(k) appointment of a liquidator or receiver of any debtor;

(l) institution of proceedings in bankruptcy, insolvency or judicial liquidation;

(m) attending, taking part in or voting at any and all meetings of creditors, shareholders, directors or

officers of any corporation or association in which I have an interest or to give proxy therefore;

(n) arbitration, suits, actions and other legal or equitable proceedings in which my interests are

concerned;

(o) representation and defence of myself and my interests before any and all judges and courts, of all

classes and jurisdictions, in any action, suit or proceeding in which I may be a party or may be

interested in administrative, civil, criminal, contentious or contentious-administrative matters, and

in all kinds of lawsuits, recourses or proceedings of any kind or nature, with complete and absolute

representation of myself, whether as plaintiff or defendant, or as an interested party for any reason

whatsoever and with power to institute actions, file statements of defence, exceptions and counter

demand, submit proofs and allegations, initiate the regular and special recourses, make bids,

undertake the execution of sentences, challenge all kinds of judges or officials, propound

interrogatories, request the recognition of signatures or of documents, institute all kinds of actions

for the repression of crimes, and desist from all classes of actions, exceptions and recourses; and for

the purpose of representing myself before any and all judges and courts and in any action, suit or

proceeding whatsoever in which my interests are concerned, to employ, retain, dismiss and grant

all necessary powers in favour of solicitors, proctors, lawyers or other persons suitable to defend

the rights, privileges and interests of myself; and, in general, to exercise all the rights of myself in all

kinds of suits, actions and legal or equitable proceedings, with power to collect the amount sums
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lodged in Court on behalf of myself and for such amounts collected to make out receipts in legal

form;
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(p) employment, retention, suspension or dismissal of any and all employees in my employ;

(q) execution signing sealing and delivery of all deeds contracts receipts acknowledgement notices

instruments documents and letters necessary and proper for effectively doing or causing to be

done any or all of the acts and things which the Attorney is by these presents empowered to do on

my behalf;

(r) generally to do or cause to be done for and on my behalf all acts and things whatsoever whether

expressly mentioned herein or not which may seem to the Attorney to be requisite or expedient to

be done or caused to be done on my behalf.

IN WITNESS WHEREOF I have hereunto set my hand and fixed my seal this … … day of … … … … … Two

Thousand.

SIGNED and SEALED by me the said )

HHHHHH )

in the presence of:- )

Advocate )

DRAWN BY:-

SSSS and Company

Advocates

NAIROBI
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SAMPLE SPECIFIC POWER OF ATTORNEY

Appointment

I, MMMM, of Post Office Box Number ***** Nakuru in the Republic of Kenya do hereby appoint *****

BANK OF KENYA LIMITED of Post Office Box Number 30691 Nairobi (hereinafter called “the Attorney”)

to be my attorney with authority to do all or any of the acts and things hereunder specified on my behalf

in relation to my property known as L R No. 209/***** (hereinafter called “the Property”)

Authority

The Attorney has authority in my name and on my behalf and on such terms and conditions as seen to

him expedient to:

1. to sell to any person all or any of my interest in the Property;

2. to charge or mortgage all or any of my interest in the property for any sum at any rate of

interest;

3. to lease all or any portion of the property for any term of years at any rent;

4. to demand collect receive and take all necessary steps to recover all rents and other sums owing

to me in relation to the property;

5. to obtain or accept the surrender of any lease in which I am or may be interested in relation to

the Property;

6. to exercise and execute all powers which are now or shall hereafter be vested in or conferred on

me as a lessee or chargee under any Act of Parliament in relation to the Property;

7. to represent me and to appear in my name and stead and on my behalf, before any Land

Registry in Kenya and before any other official government or municipal officer or competent
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local council or any other administrative officers or before any other authority in all matters
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pertaining to or connected with the Property and to sign and execute all certificates documents

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contracts and declarations before such authorities or offices and to perform all actions and

matters which may be required by law in connection with this power of attorney;

8. to enter and permit others to enter the Property;

9. to take any action to abate any nuisance;

10. to warn off prohibit and proceed against any trespassers;

11. to enforce any covenant condition and stipulation in any lease or tenancy agreement;

12. to exercise any right of re-entry or re-possession;

13. to give or receive notices for any purpose relating to the Property;

14. to oppose any application which may be detrimental to the Property its occupants its use

enjoyment or its value;

15. to bring or defend continue or discontinue any legal proceedings;

16. to refer to arbitration any question affecting the Property;

17. to employ an estate agent Advocate accountant or other professionally qualified person to

assist him in the performance of its function;

18. to appoint any agent to do any business which it is unable to do itself or which can more

conveniently be done by an agent;

19. to make any payment which is necessary or incidental to the performance of its functions under

this power of attorney;

20. for me, and in my name, to sign all such transfers and other instruments and to do all such act,

matters and things as may be necessary or expedient for carrying out the powers hereby given

and for recovering all sums of money that are now or may become due or owing to me in

respect of the Property, and for enforcing or varying any contracts, agreements or conditions
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binding upon any lessee, tenant or occupier of the Property or upon any other person in respect
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of the same, and for recovering and maintaining possession of the Property and for protecting

the same from waste, damage or trespass;

21. to do all other things incidental to the above powers or which it thinks necessary or expedient in

relation to the Property as fully and effectually as I could do them myself.

REVOCATION

I shall not revoke this Power of Attorney as long as I remain indebted in any manner to the Attorney.

IN WITNESS WHEREOF I have hereunto set my hand and seal today this day of 1999.

SIGNED and SEALED by me the )

said MMMM )

in the presence of:- )

Advocate )

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SAMPLE REVOCATION OF POWER OF ATTORNEY

Date received for Presentation Book Registration Fees

Registration………. Number…………….. K.Shs……………Paid

The Form of this instrument is approved under Section 116 of the Registered Land Act Vide Ref:
CLR/R/vv/Vol.IV/1v on 11.4.90.

GOVERNMENT LANDS ACT

REGISTERED LAND ACT

LAND TITLES ACT

REGISTRATION OF TITLES AND DOCUMENTS ACTS

CHAPTERS 280, 300, 282, 281 AND 285

REVOCATION OF POWER OF ATTORNEY

THIS DEED OF REVOCATION is made the day of One Thousand Nine Hundred and

Ninety-eight by THE FIRST ***** BANK LIMITED of Post Office Box Number mmmm Nairobi in the

Republic of Kenya.

1. By a Deed dated the Eleventh day of February One Thousand Nine Hundred and Ninety-four

whose particulars of entry in the register of Powers of Attorney and registration districts are set

out in the schedule hereto FIRST ***** LIMITED for whom we are the successors appointed

MMMM of Post Office Box Number mmmm Nairobi to be its true and lawful Attorney and for it

and in its name as attorney to perform all the singular the acts and things set out in the said

Deed.

2. As the successors of FIRST ***** LIMITED, we THE FIRST ***** BANK LIMITED are desirous of
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revoking the said appointment of Attorney of the said MMMM.

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NOW THIS DEED WITNESSETH that we, THE FIRST ***** BANK LIMITED hereby revoke and annul the

said Deed of Power of Attorney and every power and authority thereby conferred on the said MMMM

upon and subject to which the same would be at the date hereof if the said Deed has never been

executed in favour of the said MMMM.

DATED this day of 1998.

IN WITNESS WHEREOF we have hereunto caused our common seal to be affixed the day and year first

hereinbefore written.

SEALED with the common seal )

of THE FIRST ***** )

BANK LIMITED in the presence of:- )

Director )

Director/Secretary )

THE SCHEDULE HEREINBEFORE REFERRED TO

1. Land Titles Registry – Nairobi – No. IP/A 2bb3/1;

2. Land Titles Registry – Mombasa – No. CR/PA 8bbb10;

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3. District Land Registry – Nairobi – No. 4 of 4/bbbb/bbb;

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4. District Land Registry – Mombasa – No. RLA.PA. 5bbb3 of 13/6/97.

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OTHER PROFESSIONALS IN THE TRANSACTION

1. ESTATE AGENTS

Ordinarily any contract of conveyance will have two parties: the Vendor and the Purchaser, the
Chargor and Chargee, the Lessor and Lessee. The third outsider is always the Conveyancer.
However most of the conveyancing transactions have also been known to have another outsider
in the form of an agent who brokers the conveyancing deal.
Brokers are now statutorily recognized under the Estate Agents Act (Cap 533) Laws of Kenya.
Their role is to identify a party to a conveyance i.e. the Purchaser or Vendor or the Financier, at
a commission.
The Estate Agents Act was enacted ‗‘to provide for inter alia the registration of persons who by
way of business negotiate for or act in the selling or purchasing or letting of land or buildings
erected thereon‖.
Section 2(3) of the Estate Agents Act expressly exempts advocates from the provisions of the
said Act. Advocates do not need to be registered under Section 13 to practice as estate agents.
Advocates by dint of the provisions of the Advocates Remuneration Order Articles 27 (Sales) and
Article 30 (Mortgages) can also be agents even though they do not meet the stringent
qualifications outlined in the Estate Agents Act. Advocates are exempt from the provisions of
the Act under S 2(3)(Advocates can be estate agents).
For any one to earn a commission as an Estate Agent one must be registered under the said
Estate Agents Act:
See Omollo J. A. in Rajdip Housing Development Company Limited vs. J. W. Wambugu t/a
Wambugu& Company Advocates C.A.C.A 4/1991.
See Section 18 of Estate Agent Act Cap 533

18. Unregistered persons not to practice as estate agents

1) After the expiration of six months from the commencement of this Act or such further period as
the Minister may, by notice in the Gazette, allow either generally or in respect of any particular
person or class of persons—
a) no individual shall practise as an estate agent unless he is a registered estate agent;
b) no partnership shall practise as estate agents unless all the partners whose activities
include the doing of acts by way of such practice are registered estate agents;
c) no body corporate shall practise as an estate agent unless all the directors thereof
whose duties include the doing of acts by way of such practice are registered estate
agents.
2) Any person who contravenes subsection (1) shall be guilty of an offence and liable to a fine not
exceeding twenty thousand shillings or to imprisonment for a term not exceeding two years or to
both.

It is otherwise a positive transgression of the law to practice as an estate agent when one is not
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registered. (See Section 18 above)

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See also the case of Mapis Investment (K) Limited vs. Kenya Railways Corporation C.A.C.A 14 of
2005

Mapis Investment (K) Limited vs. Kenya Railways Corporation C.A.C.A 14 of 2005
The Court of Appeal in this case stated that a transaction may be declared null and void and
unenforceable ex turpi causa. The commission is earned when the transaction is actually successful
and is either as agreed or per the scale provided under the Estate Agents (Remuneration) Rules
2002.

See Rajdip Housing Development Company Limited vs. J. W. Wambugu t/a Wambugu&
Company Advocates

Rajdip Housing Development Company Limited vs. J. W. Wambugu t/a Wambugu& Company
Advocates

Facts of the case

Rajdip housing the appellant entered into a sale agreement dated March 30th 1990 to sell to Ufundi co-
operative property situated along Uhuru Highway at a consideration of Ksh. 225 million. Wambugu&Co.
Advocates acted as advocate for the appellant while Mr. Satish Gautama acted for the Society. It was a
term of the Sale Agreement that 125 million represented the developments and expenses and the
balance of the purchase price of 100 million would be paid by installments as stipulated in the
agreement.

The advocates of the appellant refused to forward some of the money (25m) to the appellants as part of
the sale price claiming that fees of some firms needed to be settled. These included fees of Lobi firm as
commission agents for the purposes of securing a purchaser and negotiating on the purchase price of
the property. The appellant contended that the advocate had no authority to negotiate the sale of its
property or to bind it in any way without its agreement nor had it held them out as having such
authority.

The advocates argued that the agreement was ambiguous and therefore extrinsic evidence was needed
to show the intention of the parties. The court was of the view that an instrument must be read most
strongly against the party who prepares it and offers it for execution. This is the rule in the maxim verba
fortiusaccipiuntur contra preferentem. Also unless otherwise shown the presumption is that the
advocates for the vendor prepare the Agreement of Sale.

The seller asked the advocate to instruct an estate agent to get a buyer for property at the asking price
of 100 million. The advocate instructed the broker who got a buyer for 200 million. Then the advocate
moved a step further and managed to secure 225 million. When the seller realized what happened he
went to court and claimed unjust enrichment and instructed the advocate to refund 25 million. The
court of appeal alluded to the fact that advocates should actually earn commission.
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Reflection

Are Advocates to be subjected to the Estate Agents (Remuneration) Rules 2002 or the
Advocates (Remuneration) Order when calculating their commissions as Advocates qua Agents?
Are Advocates deemed qualified per se under the Estate Agents Act? What happens when an
estate agent misappropriates money deposited with him and which constitutes part of the
purchase price?
It must however be noted that the role of a Conveyancer and of the Agent must always be
separated. An Advocate must as a Conveyancer keep off the negotiations and show the least
interest. Likewise an Advocate must not allow an Agent to take over his role e.g. conduct an
investigation of the title on behalf of or for the Advocate. Besides estate agents, a conveyancing
transac^on may also invite other ―innominate―par^es.
A conveyancer and or a party to the conveyance may require the services of a Valuer‘, ‘an urban
planner‘, a surveyor‘, an architect ‘to ensure the success of the transaction.

2. LAND VALUER

Land valuers must be qualified under the Valuers Act- Cap 532.
They value the property especially if the purchase is financed by a bank.

3. PLANNERS
Control of developments and subdivisions within local authorities
Planners must be registered under the Physical Planners Registration Act no.3 of 1996.

4. ARCHITECTS
Architects must be qualified under the Architects and Quantity Surveyors Act (Cap 525). Create
the architecture of the development.

5. QUANTITY SURVEYORS
They must be qualified under the Act above. They estimate the quantities and cost of the
materials labour and time of the development.

6. LAND SURVEYORS
They must be qualified under the Survey Act (Cap 299). They determine boundaries and
mapping. They are useful when subdividing the property.

Reflection: In what instant will you advise your client to engage the services of each of the
above professionals?
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DUE DELIGENCE

1. INVESTIGATING THE TITLE

Investigation of title (and property) is the process through which a Conveyancer determines
whether the client is going to ultimately acquire a good marketable title.
The Conveyancer is obliged by practice to ensure that what is being disposed of and or what is
being acquired is a good marketable title.
For three basic reasons title (and property) are investigated.

a) Caveat Emptor
Firstly the caveat emptor (Buyer beware) rule imposes an obligation on any person intending to
acquire an interest in property to investigate the same.
A Seller is under no obligation to disclose patent defects but he is under an obligation to disclose
such latent defects as he may be aware of [Reflection:
What are patent defects? And latent defects? Can you figure out some examples of either?].

Kariuki Kinuthia v. Job K. Chirchir & 3 Others [2013]

The duty of the plaintiff was clearly outlined regarding the caveat emptor rule. the court stated:
“…the rule of caveat emptor applies to contracts of sale of land and this responsibility on the part of
the plaintiff is clearly explained in Halsbury’s laws of England, fourth edition, volume 42 at para 51 as
follows: defects of quality may be patent or latent.
b) patent defects are such as are discoverable by inspection and ordinary vigilance on the part
of the purchaser, and
c) latent defects are such as would not be revealed by any inquiry which is in a position to
make before entering into the contract for purchase.
The vendor is not bound to call attention to patent defects, the rule is caveat emptor….

nemo dat quod non habet principle- one cannot purport to give a better title than he has.
See Margaret Wanjiku Kamau Vs. John Njoroge Gathuru and Another.(2005)eKLR

d) Bono fide Purchaser For Value

Secondly, the well settled principle of law that a bona fide Purchaser for value without notice
acquires a good title to property unaffected by matters of which he had no notice also dictates
that the title (or property) is investigated in order for a party to have the protection afforded by
the law to such bona fide Purchasers for value without notice:
To ensure the buyer gets a good title and hence does not suffer losses. Prudence demands this
of a good conveyancer.
Establishes encumbrances
See Oliver V Hinton 1899 2 Ch D 264,
See also Zarina Suleiman Omar & ano. Vs Musa Hersi Fahiye &5 others (2011) e KLR
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e) Prudence and Practice

The third reason for investigating a title (or property) is that prudence and practice demands the
same of a Conveyancer as well as of his client.
The client wants to be certain that it is obtaining a good and marketable title. Failure to do so
may result in a successful claim for negligence in the event of loss on the part of the client.
It may thus be said that investigation of the title (or property) is part of defensive conveyancing.

WHEN SHOULD THE INVESTIGATION BE DONE

Should investigations be carried out before or after contract?
There is no general rule.
In practice some practitioners carry out a full investigation before contract.
Circumstances may dictate which way to go depending on your assessment as a practitioner.

WHO SHOULD DO THE INVESTIGATION OF TITLE

Vendor- deducing of title, disclosure of latent defects

Purchaser
Advocates
Surveyors etc

HOW IS THE INVESTIGATION OF TITLE DONE

1. Deducing of Title
Vendor- deducing of title, disclosure of latent defects: This is the responsibility of the
vendor.
Vendor is expected to deliver on the promise that he has good title to the property.
This duty is imposed on the vendor because it is expected that the devolution of interest
in a property is best known to the vendor.
The Vendor deduces the title by submitting an abstract of title. This is a brief history of
the property showing how the interest in the property moved from one person to
another, the encumbrances and any other thing that may affect the property.
It is also called an epitome of title in many jurisdictions- a schedule of documents and
other relevant information which constitute the title together with copies of these
documents.
LSK Conditions of Sale- cond. 9 requires the abstract to be presented by the vendor within 14
days of the date of the agreement.

9.Abstract of Title
a) Within Fourteen (14) days of the date of the contract, the vendor shall deliver to the purchaser
either the title deeds or copies of the title deeds to the property or an abstract of the title to the
property.
b) Where the title deeds are forwarded to an advocate they are held by him until their return or
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until completion on his professional undertaking to hold them to the order of the vendor
returnable on demand and on his undertaking not to make any use of them other than for the
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purposes of investigating title and preparing the conveyance.

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c) The purchaser may, by notice in writing, require the vendor to produce to him copies of any title
deeds or deed plan which are necessary to complete the vendor’s title or to identify the
property.
d) Where the original deeds have not been forwarded, they shall be handed to the purchaser on
completion.

2. Investigating the Title

Immediately after receiving the abstract/epitome of title it is the duty of the purchaser to
conduct an investigation of the title.
The purchaser is expected to go to the following places:
i. Land Registry (remember the location of the registries for the various registration Acts) .
ii. Company Registry- where the property is/was owned by a company
iii. Probate Registry-where transfer is by succession
iv. Local Authority- to establish planning hindrances, notices, rates payment
v. Survey Department to establish boundaries.
vi. Physical Inspection of the property- to ensure the measurement, description,
boundaries, improvements etc correspond with what is in the title. Also to establish
patent defects.
vii. Court records- if there has been a dispute over the property. The importance of
ascertaining the existence of disputes in the matter is pegged on the principle lis pedens
that a property subject to litigation cannot be dealt with before the resolution of the
dispute.

Ideally, investigation of title (or property) will be conducted prior to the contract being
executed. Post-contract investigations of title may however also serve the purposes.
[Reflections: what dangers would post-contract investigations of title pose to the Conveyancer
and or his client? Distinguish between patent defects and latent defects.]
There are basically three mediums of investigating the title or property. These are
i. Searches
ii. Pre-contract inquiries and
iii. Requisitions.

1. SEARCHES
Like registration, searches also shield against fraud.
Searches are enquiries carried out usually by the Purchaser‘s or Chargee‘s or Leassee‘s Advocate
in the government departments so as to check ownership of the interest as well as planning,
environmental and encumbrances and other related matters which affect ownership of the
interest being transferred or given and which matters are noted or ought to be noted on the
title register.
It is effectively the purposeful inspection of title records or register at the relevant (Lands)
Registry.
Searches are provided for under Section 34 of The Land Registration Act
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34. Searches and copies.

A person who requires an official search in respect of any parcel, shall be entitled to receive particulars of
the subsisting entries in the register, certified copies of any document, the cadastral map, or plan filed in
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the registry upon payment of the prescribed fee.

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The modern Conveyancer is more concerned with the Lands Registry Search though it is
advisable that the other searches are not ignored.
Such other searches will include
i. searches at the Companies Registry to confirm existence of the Vendor or solvency of
such Vendor,
ii. search at the Local Authority Registry to ascertain any planning hindrances or notices
iii. search at the Survey Department to reconfirm or identify boundaries.
With regard to the Lands Registry searches, the statutes recognize Three types of searches
namely
a) Official or Postal
An official or postal search is one made by an Official of the relevant lands Registry at the behest
of a party upon payment of the requisite search fees and the results of such official searches are
guaranteed by both the registry and the Government as accurate.
A Certificate of Official Search is always issued for such searches.
One applies for official search by paying the requisite fees and attaching a copy of the title to the
application. A certificate of official search is issued by the registrar, who guarantees the results
and can indemnify for defective results. Other information you may consider relevant may not
be availed though.
This will enable use to verify the following:-
• The name/s of the proprietor.
o The presence of any encumbrances e.g. caveats, prohibitions.
o The registration particulars.
o The presence of any registered burdens.
Official searches are undertaken by the officials of the land office and therefore the
same are held to be conclusive
Currently only Lawyers and Advocates are allowed to conduct personal or hand searches. The
official search may have the advantage of a government guarantee and indemnity for any loss
resulting or sustained by reason of a defective official search.
But is also has its disadvantage in that the Registry staff may not be able to discern and avail all
the relevant information.
Such failure to discern and avail information may not necessarily amount to a ―defec^ve
search‖ to qualify for indemnity.

b) Personal or Un-official Search

The personal or unofficial or hand search on the other hand is made by a member of the public
by inspecting the relevant register, parcel or deed file availed by the Lands Registry staff.
One applies for personal search by paying the requisite fees and attaching a copy of the title to
the application. The register, parcel or deed file for the title is availed for one to inspect.
This is carried out by yourself by paying the requisite search fee at the registry and attaching a
copy of the title to the application. The register, parcel or deed file for the title is availed for one
to inspect:
In October 2005, the Commissioner of Lands and Chief Lands Registrar abolished personal
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searches as documents were disappearing. This decree was issued notwithstanding statutory
provisions. The other reason was that documents were being mutilated. This was ultra vires.
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LSK complained and the Commissioner said personal searches may be conducted by lawyers
only.
If you personally peruse a file, you are able to get so much information, such as the root of title
etc
A personal search enables one trace the root of title. In carrying out a search, one looks for:
i. Issues regarding ownership
ii. Issues regarding tenure/interest of property
iii. Special conditions imposed on the property especially a leasehold
iv. The user, whether commercial, residential etc
v. The existence of any adverse entries e.g. encumbrances on the title, cautions in the case
of RLA and caveats in the case of the RTA

There are however disadvantages relating to both searches e.g.

a) Missing deed files – coz of overreliance on the manual records
b) The information that one requires even if the deed file is available, may not be there e.g.
whether the land is public land that should not be allocated

NOTE: The Lands Registry always has two files relating to a parcel of land i.e. Deed file and
correspondence file

c) Historical Search

A third type of Lands Registry Search ordinarily not conducted is the “historical search”.
This refers generally to a search on the history of the subject parcel of land.
Such history will be found in the correspondence file and not the parcel or deed file.
The correspondence file contains all the details about the origin of each parcel of land from the
allotments to any subsequent subdivisions and indeed to the ―root of the ^tle‖.
The correspondence file is comprised of the internal correspondence between the various sub-
departments of the Lands Department.
It may thus be ranked confidential and it is important that an official request is made to the
Commissioner of Lands.
This has been prompted in modern day conveyancing by the “Ndungu Report of 2004 into Illegal
Allocation of Land”. For one to have access to the correspondence file one needs to write a
letter to the Land Registry and access is granted.
Correspondence arises from the history of the land i.e. when it was registered, subdivided etc
The availability of the correspondence file has however helped in discerning good and
marketable titles as was in the cases of

Gitwany Investment Limited –vs- Tajmall Limited and 2 Others ( 2006 2 E A 76)

Lenaola J. relied greatly on the correspondence file in making a finding on who was the rightful owner of
the land. The case involved double allocation of land. There are two confusing aspects as Lenaola talked
about RLA when the land was registered under RTA. There were two deed files yet there was only one
correspondence file.
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Skyview Properties Limited –vs- Attorney General & 2 Others (NBI HCCC No. 1622 of 2001 unreported).
Ojwang‟ J. relied a great deal on the correspondence file to determine the issues raised.
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Compare with this other two cases

Pashito Holdings Limited &Anor Vs Paul Nderitu Ndungu & Others [1997] eKLR
The Court of Appeal however seems to hold the contrary to the above two cases and stated that one
should not investigate a title beyond the register at the lands ‘registry.

Attorney General Vs Kenya Commercial bank Limited , Afraha High School Limited & 2 Others [2004]
eKLR
Justice Kimaru‘s obiter in that historical searches are unwarranted and unnecessary for being an affront to
the principle and concept of registration

[Reflection: do the statutory provisions allowing official searches effectively also allow a
historical search to be conducted? Need one limit himself to statutory searches only? Are you
intellectually independent of your client‘s control as an officer of the court and law and thus the
consequences of your client‘s acts must be viewed by you in the larger probably public‘s interest
as well?]
The result of Searches will disclose information in relation to the Vendor/Mortgagor and or the
property.
It may be necessary to disclose and discuss such information to the client as this may impact on
the decision to purchase or take the security.
Good practice however demands that you engage the other party or require the other party or
his Advocates to confirm position of the findings i.e. wills the detected encumbrances be
discharged?

WHY DO THE SEARCHES?

As has been put above, searches are enquiries carried out on behalf of the purchaser in the
various government departments so as to determine ownership of a property as well as other
matters including encumbrances related to the property and which affect ownership of the
property.
A search is the main mode of investigating title.
The reasons behind doing a search are:-
1) The caveat emptor rule imposes an obligation on any person intending to acquire an
interest in property to investigate the same.
2) The principle of law that a bona fide purchaser for value without notice acquires a good
title to the property unaffected by matters of which he had no notice also dictates that
the title is investigated in order for a party to have the protection afforded by the law to
such bona fide purchasers for value without notice.
3) Prudence and practice demands the same of a conveyancer as well as his client.
For our case, the above searches will be important since they will front the following: -
1) That the said property has a residual lease that is about to expire.
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2) Whether or not there will be any reason to have our client buy the said property in view
of the remaining period of 9 years to the expiry of the lease.
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3) The need to explore avenues of addressing the expiry of the lease and whether or not
our client if he purchases the property will have an option of getting a fresh lease from
the government and if the lease is not renewed if the government will allow our client
to hold the said property under a license.
4) Further in event that all this options fail assuming our client has bought the property, if
it will then be viable to sell the same to the government and in such an instance will our
client get a worthwhile amount from the government so that even if he spends the huge
amount now, he is sure of getting a better figure from the government after the lease
expires. If so we may advice him to buy the property, earn from it for the 9 years then
have the government buy it from him. Here the purchase price the government will
offer after the said expiry is pivotal. Section 71 of Government Lands Act provides that
the president can offer to purchase such a property. In the purchase, the price is to be
issued by the government and if not agreeable to be referred to arbitration. This then
provides a forum where the price can be contested so that the two parties [the owner
of the property on an expiring lease and the government] arrive at a fair price. If this be
the case, we will advice our client to proceed and purchase the property and await a
renewal or sell the said property to the government.

AFTER SEARCHES

Once you are through with the search you should inform your client of any adverse entry.
You should then clarify with the other side whether the transaction can proceed or not.
You should satisfy yourself that whatever adverse impacts/entries revealed will not adversely
affect your client e.g. if there is a mortgage, whether the sale price will clear the mortgage in
full.
Other Searches
1) Companies Registry
A search at the companies‟ registry will reveal whether the company still exists,
whether there are insolvency proceedings etc

2) Survey Departments
This is through public index maps, a search here will help determine if the property is
actually registered.
It usually costs KES 300 to conduct a search.
This department is very important as registration starts here- this is where the LR
number is generated.

3) Local Authority
Discloses zoning/development policies of land. Urban planners and surveyors can carry out
these searches.
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This is especially important when you know what use is to be made of the land .
A local authority search will reveal any adverse proposals e.g. advice to the Government of
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Challenges in Searches
1) Unavailability of deed files or “missing titles”
2) Mutilation and destruction of files and documents in the files
3) Delays with regard to search results. You need about seven clear working days before you get
them
4) Unavailability of Land Registers to sign your searches i.e. lack of efficiency and skilled manpower
at the Land Registries
5) Slow pace of computerisation

Significance of Searches
1) Failure to carry out a search may lead to the failure to register a document e.g. because of the
existence of encumbrances
2) The vendor may turn out not to be the owner of the property. This can be discovered by a search
3) The title document may be a forgery
4) The above errors occasioned because of omitting to carry out search may lead to negligence suits
against you (Advocate)

Letters of Allotment
These come from the Government through either the Commissioner of Lands or the Local
Council if it is Council Property. It is risky to deal with a letter of allotment e.g.
Most have stringent conditions which if not complied with within the stipulated time
automatically revokes the letter of allotment
One may carry out a historical search on land being allotted on the general file i.e. zone file and
correspondence file etc. in carrying out a search on the basis of a letter of allotment look out for
planning conducted e.g. by the Local authority.
Look for the Part Development File (PDF) which should be properly prepared and signed by the
Chief Physical Planner and Commissioners of Land .
Also do a search at the Survey Department which involves a consideration of the boundaries.
NOTE: The CA has held that unless a letter of allotment is registered it is not recognized.

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SAMPLE SEARCH

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SAMPLE RECEIPT FOR A SEARCH

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2. PRE-CONTRACT INQUIRIES

This is a medium of investigating title.

This seeks to elicit information on matter not covered by the above searches, but which relate
to the physical condition of the property.

What should be asked?

The development prospects of the property and if possible if the vendor is aware of the
neighboring property i.e. would the neighbour agree to a sale or development of the property in
a particular manner;
Any physical defects to the property. Note, the vendor is under no obligation to volunteer such
information, but if they do so they must tell you everything of the physical structure of the
property.
Any disputes existing in court or before any tribunal touching the property;
If there are people in the property it is good to know on what basis they reside in the property.

It concentrates more on the key issues in relation to the property being investigated: -
a) The physical condition of the property.
b) The location of the property.

Pre Contract inquiries are also a medium of investigating the title (or property).
They are preliminary inquiries relating more to the physical condition of and location of the
subject property as well as the proposed contractual document itself.
A Purchaser will ordinarily want to know the physical condition and extent of the property.
For this the Purchaser will conduct a personal inspection of the property or deputize his agent
(e.g. a valuer).
The inspection is conducted to help ascertain not only the value of the property but also to
detect physical and patent defects, ascertain those in occupation, ascertain the boundaries and
also to check on the fixtures and fittings, if any.
Naturally these are matters not covered by searches and pre-contract inquiries will thus be
made after such physical inspection to help plug in the gaps.
Pre contract inquiries thus relate to matters touching on the physical condition of the property
as well as other matters not covered by searches. They are as important as searches.
The Purchaser, for example, buys the property as it stands and the Vendor is under no duty to
disclose any physical defects in the property.
The Purchaser must be advised by the Conveyancer of this and must be further advised that in
order to protect himself or herself he or she should have the property fully surveyed and
inspected before the contract is signed.
Some of the pre contract matters one will bother himself with include development prospects
and planning permission matters of the property and adjoining property, access to the property,
boundaries of the property, water supply, physical defects detected or suspected, disputes
existing in court over property, tenants in occupation or absent, etc.
The full extent of the pre contract inquiries will depend on each particular transaction and
property.
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When acting for the Vendor it is important not to presume any answers to pre contract inquiries
but to consult with the client and answer accurately as possible.
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These are those enquiries made to the seller or he who is parting with an interest with the
intention of seeking or eliciting information not covered by the searches and information
touching on the physical stature of the property.
When posing the contract questions ask relevant questions. Ask questions for instance about
the tenants or occupants in the premises, the terms of their occupation or tenancy, enquire
about any physical defect touching on the property which the vendor may be aware of but on
the face of inspection of the property is not easily detected.
Ask about the developing prospects of the neighboring properties. Whether there has been any
boundary change in the last few years. The vendor is under no duty to reply but if they reply, it
must be accurately i.e. a reply one can rely on. Therefore, as a conveyancer do not give
anticipatory or stereotype answers.
If one gives inaccurate answers, the recipient who relies on them can claim damages and if the
contract is already signed, one may rescind the contract. The recipient has a right to sue in tort
for negligent misrepresentation where the answers are inaccurate. The UK has a
Misrepresentation Act but there is no such equivalent in Kenya. In Kenya, however, it has been
held that proximity and foreseability can be extended to contract.
Answers if unequivocal and relied upon but turn out to be untrue can lead to a suit in damages
both against the client and his Advocate providing the answers especially where the Advocate
decides to step out of his role as Advocate and accepts direct responsibility towards the third
party. An advocate should not step into the shoes of his client and give answers on his
behalf unless authorized See Gran Gelato Limited –vs- Richcliff (Group) Ltd [1992] 1 All ER
865.

Gran Gelato Limited –vs- Richcliff (Group) Ltd [1992] 1 All ER 865.
The plaintiff paid £30,000 for an under-lease for 10 years. He thereafter spent £100,000 renovating and
shop-fitting the premises to manufacture and sell ice-cream. The head lease contained a break clause if
there was a requirement for re-development by the head lessor. The break clause required a 12 month
notice.

Before the grant of the under lease the plaintiff’s advocate sent to the second defendant (advocate for
the first defendant) inquiries before lease i.e. pre-contract inquiries and sought to know if there were any
rights affecting the superior leasehold title which would inhibit the enjoyment of the premises by the
plaintiff in accordance with the draft sub-lease. The advocate replied that there was nothing of the kind
to the best of the lessor’s knowledge. Five years after the service commenced, the break clause in the
head lease was exercised. The plaintiff claimed damages against the head lessor and the advocate for
negligent misrepresentation in view of the inaccurate answer at pre-contract inquiries.

It was held that, in the course of a normal conveyancing transaction, the seller’s advocate did not owe
the buyer a duty of care when answering enquiries before contract because a buyer has a remedy
against the seller for misrepresentation. However, if the advocate took steps out of his role as an
advocate and accepts responsibility towards a third party then he owed independent duty.

See also Cross J‘s holding in National Provincial Bank Ltd Vs Hastings 1965 AC 1175 that
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―persons dealing with unregistered land must obtain same information outside the register in
the same manner and from the same sources as people dealing with unregistered land would
obtain it‖.
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PHYSICAL INSPECTION OF THE PROPERTY

Though in Ag v. KCB & 3 others the Court of Appeal held that you do not need to investigate title
beyond the register you should also advise the client to inspect the property.

What to look for:

Any defects;
Who is in actual occupation;
Check the boundaries of the property;
Check any rights or interests affecting the property;
Check fixtures and fittings of the property which you may have to include in the agreement itself
and it is important to get a description of them.;
Utilities supply; and
Access to the property.

A buyer should always be advised to inspect the subject property prior to exchange or signing of
contracts.
Why check the state and condition of the property. The reasons for this are fivefold;

1) Caveat Emptor
In general the seller is under no obligation to reveal defects in the property.
There is normally no warranty given about the state of the property and consequently all buyers
should obtain their own survey report before contracting to purchase property.
The caveat emptor rule (let the buyer beware), applies to conveyancing transactions.
In most cases, sale agreements will stipulate that the buyers accept the property in the physical
state it is in at the exchange of contracts.
A prudent buyer will therefore use the services of professional advisers such as surveyors or
valuers to assist in inspecting all the buildings.

2) To check who is in Actual Occupation of the Property

This is critically important as the seller may not be the person in actual occupation of the
property and others could be entitled to occupy the property not withstanding that they are not
co-selling.
It is of most importance to check that there are no undisclosed occupants within the property
who could claim rights of occupation and thereby delay or defeat completion.
As well as physically inspecting the property, a buyer‘s advocate will also raise written enquiries
about who is in occupation (e.g. tenants.)

3) To check boundaries
A buyer will want to be sure that the contract correctly describes the property and the
boundaries on the ground are the same as those shown in the title and in the contract.

4) To check on rights and easements affecting or benefiting the properly.

A physical inspection of the property will assist the buyer establish the rights of others, such as
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path ways and gates.

Any easements adversely affecting the property should be referred to the seller without delay
for clarification.
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5) To check fixtures and fittings contracted to be sold are in the subject property just prior to the
exchange
The buyer will want to be sure that items to be sold actually exist and are within the subject
property. (Water tanks, electrical fence, etc)

Advice on Survey
A purchaser / mortgagee/chargee should always be advised to have a survey carried out before
exchange of contracts because of the caveat emptor principle, 'let the buyer be ware.' It is for
the buyer to discover all the physical defects in the property and these may not be apparent
from the clients own inspection.
A client may sometimes be reluctant to incur additional expenses in survey fees. It is however
the advocate's responsibility to advise the client that this is money well spent.
Failure on the advocate's part to give this advice could amount to professional negligence.
A physically defective property may of course be unsafe to occupy but there are financial
implications for the purchaser as well.
The market value of a property will be reduced if a property is in poor condition and so the
purchaser may be paying more than he/she should.
This may also adversely affect the purchaser's ability to mortgage the property or sell it at a later
date.
There is also the danger of non-existent properties. These are all considerations that must be
drawn to the client's attention.
Basic valuation by a registered valuer constitutes one of the simplest and cheapest forms of
survey. It constitutes a visit and physical examination of the property to establish the property's
value on the open market and its physical delineation.
A valuation report is important especially if the property is to be charged to secure a loan.
A mortgagee's surveyor/valuer owes a duty of care not only to the lender but also the borrower
who relies on the report.
A copy of the valuation report should be made available to the borrower. Special considerations
when valuing include; neighbouring properties, drainage, infrastructure, location, the zoning
and development policy by municipal authorities of the property area are also key.
[Reflection: What remedies are available to a recipient of inaccurate answers to pre-contract
inquiries or requisitions?]

3. REQUISITIONS

These are such inquiries or objections to the title which come as a result of one’s inspection of
the title document and title documents. T
Things to look out for are:
i. Whether the document has been properly executed and witnessed e.g. if a company as
opposed to an individual (common seal in the presence of two directors, whether there
is a proper power of attorney in place) .
ii. Whether the proper stamp duty on the document was paid
iii. Whether there are any particular encumbrances or adverse interests enforced in the
title e.g. Grants always have conditions and or limitations
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It is upon investigation of title documents that requisitions are sent out. Requisitions are often
directed at the vendor or seller.
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Ordinarily, requisitions are sent before contract is executed. However, there is no harm in
sending the same after the contract has been executed.
This authority is given by the LSK Conditions of Sale, Condition No.10

10.Objections and Requisitions

a) Within fourteen (14) days after delivery to him of the abstract, title deeds or copies, the
purchaser may give the vendor notice in writing of any objection to or requisition on:
i. title or evidence of title; or
ii. the description of the property; or
iii. the abstract; or
iv. the contract, as regard matters not therein specifically provided for;
Subject to any objection or requisition, the purchaser is deemed to accept the
vendor’s title.
b) No objection or requisition may be made subsequently unless it could not have been made
on the information supplied by the vendor.
c) All objections and requisitions shall be answered in writing within Fourteen (14) days after
receipt and, if not so answered, are deemed to be correct.
d) Time is of the essence of this Condition.

NOTE: Good practice dictates that requisitions be sent out before execution Example:
a) Is the signature the proper signature of the executor?
b) If execution is by a company, ask for the mode of execution of the company and a copy of the
Memorandum and Articles of Association. If a foreign company, and the MEMARTS are in a
different language ask for a legal opinion.
c) Ask about the identity of the property
NOTE: There is no format for requisitions
An answer to a requisition just as in pre-contract enquiries if it turns out to be inaccurate, the
recipient will be entitled to rescind the agreement, or if damage caused is not so substantial, he
may proceed with the agreement and seek remedies in damages.
Requisitions are also very important when you are acting for lenders i.e. mortgagees or chargees
having to exercise the statutory power of sale.
If there is a defect in the title document, one can go to court and say the title was defective
therefore property cannot be sold.
Upon receipt of requisitions, an advocate should consult with his client however, unlike pre-
contract inquiries; one is under a duty to advice his client. Do not give stereotype answers.
The purpose of requisitions on title besides aiding the process of investigation of title is to help
give the Purchaser title in accordance with the contract for sale.
Requisitions relate to matters which arise not on the basis of the search or simple physical
inspection of property but through the inspection of the title document or abstract availed.
The requisitions are in the form of forthright questions arising after a perusal and deduction of
the title document.
Deduction will relate to tenure or the property, execution of the title document, identity of and
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description of The LSK Conditions of Sale (1989) at Condition 10 provide for the requisitions or
objections to be made after the contract has been executed and in any event not later than
fourteen (14) days after delivery of the abstract, title deed or a copy thereof.
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However as requisitions do not enable the Purchaser to have a second bite of the cherry in
respect of matters which were overlooked at the time of execution of the contract, good
conveyancing practice would tilt towards conducting requisitions prior to the execution.
A Vendor is however under an obligation to fully and correctly answer the requisitions.

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LECTURE 6: FRIDAY 29 APRIL-27 MAY 2016- MORNING SESSION (LECTURE HALL

A)

TOPIC 6: THE CONTRACT PERIOD STAGE

The student should be able to prepare, peruse and advise on an agreement for sale.
The student should be able to have the agreement executed in accordance to law and good
practice an appreciation of the law of obligations or contract law is demanded.
An “enforceable contract” with regard to disposition of interest in land is reviewed. The form
and substance of the agreement is considered.
The student is expected to make an independent judgment in characterization of the parties to
the transaction as well as contents of the sale Agreement whilst being conscious to freedom of
the parties to contract as they may wish.

Intro

Disposition in land generally is a transfer of an interest in land.

There are two stages in disposition
i. First- contract for sale (Sale Agreement)
ii. Conveyance (Transfer)
See the definition of disposition in Land Act 2012.It covers both transfer and agreement to .

“disposition” means any sale, charge, transfer, grant, partition, exchange, lease, assignment, surrender, or
disclaimer and includes the disclaimer or the creation of an easement, a usufructuary right, or other
servitude or any other interest in a land or a lease and any other act by the owner of land or under a lease
where the owner’s rights over that land or lease are affected or an agreement to undertake any of the
dispositions;

Law of Contract and basic requirements of an enforceable contract generally

Definition of a Contract
Contract is an agreement giving rise to obligations which are enforced or recognized by law.

Why do we need a Contract

1. It deals fully with the matters that must be dealt with between the date of the contract
and completion;
2. crystallizes the position of the parties;
3. It binds the parties to the sale, prevents last minute withdrawal by either party and
facilitates completion;
4. Parties may use it to confer special advantage on themselves;
5. It may be used to transfer the legal interest on chattels so as to reduce the duty payable
at the completion stage;
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6. It provides for the resolution of any disputes that may arise between the date of the
contract and completion;
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8. It gives the purchaser time to investigate the title;

9. The equitable doctrine of conversion is applicable to these kinds of contracts;
10. It makes the transaction enforceable-S. 3(3) of the Law of Contract Act.;

NATURE OF CONTRACT FOR SALE OF LAND

A contract to sell or make any other disposition in land is made in the same way as any other
contract:-
An agreement for valuable consideration between the parties on the essential terms.
There are three types of contracts- simple, evidenced in writing, formal
It is important to note that although a valid contract relating to land may be made orally, it will
be unenforceable i.e. by action

Essentials of a Contract

An agreement to sell land is basically a contract. Consequently compliance with the basic tenets
of the Law of Contract is necessary and so is compliance with the provisions of the Law of
Contract Act (Cap 23) Laws of Kenya i.e. the sale agreement must be in writing, signed by both
parties and their signatures attested to.
The essential elements of a contract are
a) Offer
b) Acceptance
c) Consideration
d) Intention of the Parties
e) Capacity
f) Legality
A good and enforceable agreement will thus not only exhibit offer, acceptance, capacity,
consideration and certainty.
Reflection: what if an offer is accepted ―subject to contract?‖ or ―subject to suitable
arrangements being made between your solicitors and mine.

VALIDITY VERSUS ENFORCEABILITY

A valid contract is one with the ingredients described above
What about an enforceable contract? Prior to 2003 S3(3) of the Law of Contract (LAC) provided
as follows:

“ no suit shall be brought upon a contract for the disposition of an interest in land unless the
agreement upon which the suit is founded, or some memorandum or note thereof is in writing and
signed by the party to be charged or some person authorized by him to sign it.

Provided that such suit shall not be presented by reason only of the absence of writing, where an
intending purchaser, or lessee who has performed or is willing to perform his part of the contract:
a. Has in part performance of the contract taken possession of the property or any part
thereof; or
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b. Being already in possession continues in possession in part performance of the contract

has done some other act or in furtherance of the contract
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ENFORCEABILITY
The requirement for writing was introduced in a 1968 and was borrowed from the Statute of
Frauds of 1677.
This requirement of writing was often defeated by the application of the equitable doctrine of
part performance.
An amended was introduced on 1st June, 2003 vide Act No. 2 of 2002. Section 3(3) was repealed
to read as follows:

LAW OFCONTRACTS CAP 23

3. Certain contracts to be in writing.

1) No suit shall be brought whereby to charge the defendant upon any special promise to answer
for the debt, default or miscarriages of another person unless the agreement upon which such
suit is brought, or some memorandum or note thereof, is in writing and signed by the party to be
charged therewith or some other person thereunto by him lawfully authorized.
2) No suit shall be brought whereby to charge any person upon or by reason of any representation
or assurance made or given concerning or relating to the character, conduct, credit, ability, trade
or dealings of any other person, to the intent or purpose that such other person may obtain
credit, money or goods, unless such representation or assurance is made in writing, signed by the
party to be charged therewith.
3) No suit shall be brought upon a contract for the disposition of an interest in land unless-
a) the contract upon which the suit is founded-
i. is in writing;
ii. is signed by all the parties thereto; and
b) the signature of each party signing has been attested by a witness who is present when the
contract was signed by such party:

Provided that this subsection shall not apply to a contract made in the course of a public auction
by an auctioneer within the meaning of the Auctioneers Act, nor shall anything in it affect the
creation of a resulting, implied or constructive trust.

4) Subsection (3) shall not apply to a contract made in the course of a public auction nor shall
anything in that subsection affect the creation or operation of a resulting, implied or a
constructive trust.
5) The terms of a contract may be incorporated in a document either by being set out in it or by
reference to some other document.
6) For the purposes of subsection (3)-
“disposition” includes a transfer and a devise, bequest or appointment of property contained in a
will;

“transfer” includes a mortgage, charge, lease, conveyance, assignment, assent, vesting

declaration, vesting instrument disclaimer, release and every other assurance of property or any
interest therein by any instrument other than a will or a codicil;
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“party” includes any agent, auctioneer or advocate duly authorized in writing to act in the
absence of the party who has given such authority;
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proceeds of sale of land;

“sign”, in relation to a contract, includes making one’s mark or writing one’s name or initial on
the instrument as an indication that one intends to bind himself to the contents of the
instrument and in relation to a body corporate includes-
a) signature by an attorney of the body corporate duly appointed by a power of attorney registered
under the Registration of Documents Act;
b) the affixing of the common seal of the body corporate in accordance with the constitution or the
articles of association of the body corporate, as the case may be, in which case no further
attestation shall be required.
7) The provisions of subsection (3) shall not apply to any agreement or contract made or entered
into before the commencement of that subsection.

After this amendment, the requirement of writing is absolute i.e. for a contract to be
enforceable it must be in writing.
Reflection: What of the many transactions in rural Kenya and elsewhere which maintain oral or
memoranda as a formal of contract? Have we effectively locked out the equitable doctrine of
part performance?
INTERPRETATION OF S3 (3)
Prior to the amendment of 2003
See the following two cases

Morgan vs. Stubenitsky (1977)KLR 188

It was held that though the memorandum was signed it was devoid of the envisaged terms, therefore
there was no agreement capable of satisfying s3(3) of LCA

Wagiciengo vs. Gerrard (1982) CAN 336.

It was held that 2 unsigned documents (one contained terms of the agreement, the other a schedule of
payments received) in the defendant‘s handwriting, satisfied the requirement of S3(3) of LCA

Post 2003 amendment

See the following two cases

Kenya Institute of Management vs. Kenya Reinsurance Corporation 2008 eKLR

The defendant had advertised its property (South C Sports Club) for sale in the newspaper; the plaintiff
made an offer, entered into negotiations and agreed on a price. The Plaintiff sought financing but by then
the defendant had sought to withdraw from the transaction. Though the Court found that no agreement
within the meaning of S3(3) existed, it granted the injunction on the basis of high handedness of the
defendant.

Mumias Sugar Co. Ltd vs. Freight Forwarders (K) Ltd Nairobi 2005 eKLR-
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It was held that S3 (3) conditions were not satisfied.

No action may be brought- the effect of non-compliance with this provision is not to make the contract
void but merely make it unenforceable.
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important rights.

Reflection:
Is it true that the provision does not bar the contract from being enforced in any other way
except by action?

CONTRACT FOR SALE OF LAND

It is open for the parties to make a contract as they deem fit. In practice certain standard
forms of conditions have been settled on.
The Law Society Conditions of Sale (1989 edition) outlines various terms and conditions for
the sale of property.

IMPLIED TERMS

S.3 (3) of the Law of Contract Act is silent as to the contents of a contract.
S.55 of the ITPA lays out some of the basic terms of a sale which will be implied to any sale
agreement in the absence of an agreement to the contrary.
There is no equivalent section in the RLA save that s.38 gives the Minister in charge the power to
lay out any implied and general terms in consultation with the LSK.
By virtue of s.38, the LSK in 1972, 1982, 1989 and 2015 came up with Conditions of Sale which
will apply to any open contract.
S.55 of the ITPA provides that in the case of an open contract (which does not have various
terms) the;
a. Vendor is under a duty to disclose any defects to the property that he is selling
(i.e. latent but not patent defects)
b. Vendor must also produce the title documents for purpose of inspection and
not delivery
c. Vendor is under an implied statutory duty to execute the conveyance or the
transfer in exchange for the payment of the purchase price which entitles one
to move to court for specific performance
d. Vendor will pay all outgoings and discharge all encumbrances registered against
the property
e. Vendor is under a duty to take care of the property after execution of the sale
agreement and before the completion takes place. This includes the
management of the property, ensuring that reasonable repairs are undertaken
on the property and ensuring that there are no squatters or trespassers on the
property (one need not improve the property unless the contrary is provided
for)

See Dharmashi v Abdulrahman (1950) 24 KLR 24

Dharmashi v Abdulrahman (1950) 24 KLR 24

It was held that the vendor must ensure the property must not physically deteriorate and must manage the
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property as appropriate (vendor is trustee)

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S.55 provides that the purchaser:

i. must pay the full purchase price at completion .
ii. upon taking possession is under a duty to disclose any value hidden fact that he
becomes aware of but which the vendor is not aware of

S.55 ITPA does not apply to RLA.

The sale agreement is ordinarily prepared by the Vendors advocate because the vendor
dictates the terms.
See: Salim v Okong’o (1975) KLR – Duties of Vendor’s advocate

Salim v Okong’o (1975) KLR

The vendor’s advocate then sends the draft to the purchaser’s advocate for perusal and confirmation of
the terms in that sale agreement
Prior to drafting one must have obtained all the details relating to the parties from the vendor
Engrossment (reducing it into a formal legal document) before registration

VENDOR IS BOUND BUYER IS BOUND

To disclose to the buyer material latent defects To disclose to the seller info which increases the
in the property value of the property

To produce upon request title documents Pay purchase price on completion

Answer to the best of his information all relevant If sold free of encumbrances, retain part of purchase
questions from the buyer price to cover encumbrances

On payment of the purchase price, execute a When property has passed to him bear losses on the
conveyance property not caused by seller

Between the date of the contract of sale and Where property has passed to him, pay all public
delivery of the property take care of the charges, rent etc
property and title documents( Dharmshi vs
Abdul Reikhman (1950) 204 KLR
To give possession of the property when
required

Pay public charges and rent

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Other terms are found under Section 46 -48 of the Section Property Act No.21 of 1987

Section Property Act No.21 of 1987

Part IV - Provisions Relating to Residential Units
46. Sale of residential unit

(1) A developer shall not sell or agree to sell a unit or proposed unit unless he has delivered to a
purchaser a copy of –
(a) the purchase agreement;
(b) the by-laws or proposed by-laws;
(c) any management agreement or proposed management agreement;
(d) any recreational agreement or proposed recreational agreement;
(e) the lease of the parcel, if the parcel on which the unit is located is held under a lease and
the certificate of sectional property in respect of the unit or proposed unit which has
been or will be issued under section 5 (1) (c);
(f) any charge that affects or proposed charge that will affect the title to the unit or
proposed unit or, in respect of that charge or proposed charge a notice prescribed under
subsection (2); and
(g) the sectional plan or proposed sectional plan.
(2) A developer shall deliver to the purchaser in respect of a charge or proposed charge a written
notice stating –
(a) the maximum principal amount available under the charge;
(b) the maximum monthly payment that may be paid under the charge;
(c) the amortization period;
(d) the term;
(e) the interest rate or the formula, if any, for determining the interest rate; and
(f) the prepayment privileges, if any.
(3) Subject to subsection (4), a purchaser of a unit under this section may, without incurring any
liability for doing so, rescind the purchase agreement within ten days from the date the purchase
agreement was executed by the parties to it.
(4) A purchaser may not rescind the purchase agreement under subsection (3) if all the documents
required to be delivered to the purchaser under subsection (2) have been delivered to the
purchaser not less than ten days prior to the execution of the purchase agreement by the parties
to it.
(5) If a purchase agreement is rescinded under subsection (3) the developer shall, within ten days
from his receipt of a written notice by the purchaser of the rescission, return to the purchaser all
of the money paid in respect of the purchase of the unit.
47. Contents of purchase agreement.
Every developer who enters into a purchase agreement shall include in the purchase agreement the
following –
(a) a notification that is at lease as prominent as the rest of the contents of the purchase agreement
and that is printed in red ink on the outside front cover or on the first page of the purchase
agreement stating as follows - “The purchaser may, without incurring any liability for doing so,
rescind this agreement within ten days of its execution by the parties to it unless all of the
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documents required to be delivered to the purchaser under section 46 of the Sectional

Properties Act, 1987 have been delivered to the purchaser not less than ten days prior to the
execution of this agreement by the parties to it.”
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i. the interior finishing of all major improvements to the common property located within a
building;
ii. the recreational facilities, equipment and other amenities to be used by the person
residing in the residential units;
iii. the equipment to be used for the maintenance of the common property;
iv. the location of roadways, walkway, fences, paing areas and recreational facilities;
v. the landscaping; and
vi. the exterior finishing of the building as it will exist when the developer has fulfilled his
obligations under the purchase agreements;
(c) the amount or estimated amount of the monthly unit contributions in respect of a residential
unit; and
(d) the unit factor of the unit and the basis of unit factor apportionment for all units comprised in
the sectional plan.
48. Payment held in trust.
(1) A developer or a person acting on his behalf shall hold in trust all the money paid by a purchaser
under a purchase agreement other than rents, security deposits or mortgage advances; and –
(a) if the improvements to the unit and the common property are substantially completed,
the money may be paid to the developer on delivery of the title documents to the
purchaser; or
(b) if the improvements to the unit are substantially completed but the improvements to the
common property are not substantially completed –
i. not more than fifty percent of that money less the interest earned on it may be
paid to the developer on delivery of the title document to the purchaser; and
ii. on the improvements to the common property being substantially completed,
the balance of that money and all the interest earned on the total amount held
in trust in respect of that purchase agreement may be paid to the developer.
(2) The developer or a person acting on his behalf who receives money that is to be held in trust
under subsection (1) shall forthwith deposit the money into an interest earning trust account
maintained in a bank or financial institution licensed under the Banking Act.
(3) If money is being held in trust under subsection (1) and the purchaser of the unit takes
possession of or occupies the unit prior to receiving the title document, the interest earned on
that money from the day the purchaser takes possession or occupies the unit to the day he
receives the title document shall be applied against the purchase price of the unit.
(4) Subject to section (3), the developer is entitled to the interest earned on money held in trust
under this section.
(5) For the purposes of this section, improvements to the unit or the common property, as the case
may be, are deemed to be substantially completed when the improvements are ready for use or
are being used for the purpose intended.
(6) This section does not apply in respect of money paid to a developer or to a person acting on
behalf of a developer, under a purchase agreement, if that money is held under the provisions of
a plan, agreement, scheme or arrangement approved by the Minister that Payment held in trust.
Cap. 488 provides for the receipt, handling and disbursing of all or a portion of that money or
indemnities against loss of all or a portion of that money or both.
(7) The provisions of this section shall not apply if the purchaser does not perform his obligations
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under the purchase agreement.

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The Sale Agreement Generally

(1) What is the position of the vendor and the purchaser? It has been stated that the vendor
becomes the trustee for the purchaser between the time of execution and completion of the
sale agreements. Do statutes support the statement?
(2) What sort of sale agreement is acceptable to my client? A simple agreement or a complex one
with damages etc. In the case of short/simple agreements, one leaves himself open to implied
provisions and the courts mercy. The complex agreement covers more issues. There is no
statutory requirement for the format of a sale agreement. One may opt for a hybrid agreement,
not too simple and not too complex depending on the circumstances. Do not include
irrelevancies.
(3) The agreement must comply with any statutory requirements. These include:
(a) The Law of Contract Act (s.3)
(b) Other statutes will vary depending on the circumstances
(4) A sale agreement is a contract and one must ensure that the agreement is in tandem with all the
Law of Contract principles of:
i. offer and acceptance
ii. intention to be bound
iii. consideration exchanging hands
iv. the contract is certain
(5) Under the statute, there are three basic requirements that relate to the form of the agreement:
Cap 23 – Law of Contract Act (s.3)
i. The agreement for sale of land to be enforceable must be in writing. This applies to all
dispositions of interest in land.
ii. The agreement must not only be signed by both parties but the execution must be
attested/ witnessed in the presence of the person attesting. This requirement runs
across e.g. for a charge includes attestation of the facility letter.

Where do you sign?

Practice dictates that you sign at the end but since the purpose of the execution is to
authenticate the document it can be anywhere as long as it is witnessed.
iii. The terms of the agreement ought to be in one document – s.3 seems to allow
incorporation of terms by reference. Although the reference is in the one document. In
the UK, there can be more than one document.

Difference between agreement to sell land and a contract for sale of land?

Question then is: Why do we draft and title the contract as ―a contract for sale‖ or a ―a sale
agreement‖?
What is the difference anyway between a contract and an agreement or there is no difference?
A "sale" is (colloquially) a completed transaction where the only remaining duties of the buyer
may be timely rejection after inspection, and the only remaining duty of seller is to honor any
express or implied warranty. This assumes the full price was paid during the sale and the goods
were delivered, otherwise, the sale is not technically complete.
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An "agreement to sell" is a contract that envisions (or defines) a future sale, thus all conditions
precedent and other terms (delivery, payment, etc), continue to be "executory", that is, and are
yet to be fully carried out. A breach of this contract could result in a court order of specific
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performance, or for damages caused by the loss of the opportunity to buy or sell.

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See the analysis by Lord Diplock in: Derry vs. Peek, Shaw vs. Forster)? Lord Diplock‘s gave
reference to ―bisynallagma^c‖ associa^ons as dis^nguished from ―mere concordance of
opinions‖] .
An agreement to sell land is basically a contract.
The next question perhaps thus that one would want to ask himself is what sort of agreement is
he to draw: a ―pigs, whistles and all‖ or a ―mini skirt‖ agreement? It is recommended that a
hybrid of both be adopted, instead of either.
Finally there is the need to ask and answer the question: what is the nature of the relationship
that exists between the parties during the period between the execution and completion of the
contract. (See As an agreement is a contract compliance with the basic tenets of the Law of
Contract is necessary and so is compliance with the provisions of the Law of Contract Act (Cap
23) Laws of Kenya as well as Sections 38 through 42 of the Land Act 2012.

PART V – ADMINISTRATION AND MANAGEMENT OF PRIVATE LAND

Contracts Over Land

38. Regaining possession of land after concluding contract of sale of land
(1) No suit shall be brought upon a contract for the disposition of an interest in land unless—
(a) the contract upon which the suit is founded—
i. is in writing;
ii. is signed by all the parties thereto; and
(b) the signature of each party signing has been attested to by a witness who was present
when the contract was signed by such party.
(2) Subsection (1) shall not apply to a contract made in the course of a public auction nor shall
anything in that subsection affect the creation or operation of a resulting, implied or a
constructive trust.
39. Vendor’s right to regain possession
If, under a contract for the sale of land, the purchaser has entered into possession of the land, the
vendor may exercise his or her contractual right to rescind the contract by reason of a breach of the
contract by the purchaser by—
(a) Resuming possession of the land peaceably; or
(b) Obtaining an order for possession of the land from the court in accordance with the provisions
of section 41.
40. Damages for breach of contract
(1) Nothing in section 39 prevents a vendor from claiming damages and mesne profits from the
purchaser for the breach of a contract for a sale, or for breach of any other duty to the vendor
which the purchaser may be under independently of the contract, or affects the amount of
damages that the vendor may claim.
(2) Any term express or implied in a contract or other instrument that conflicts with this section
shall be inoperative.
41. Procedure for obtaining order for possession
(1) A vendor who proposes to seek to regain possession of private land under section 39, shall
serve a notice on the purchaser which shall inform the purchaser—
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(a) of the nature and extent of the breach complained of by the vendor;
(b) whether the vendor considers that the breach is capable of being remedied by the
payment of a stated amount of money owing under the contract;
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purchaser doing or desisting from doing anything or paying reasonable compensation

or both, and of the thing that the purchaser must do or desist from doing or the
amount of compensation that shall be paid or both to remedy the breach and the time,
being not less than thirty days, within which the actions referred to in this paragraph
must be completed;
(d) of the period within which the purchaser must remedy the breach, if the vendor
considers that the breach is capable of being remedied; and
(e) of the consequence where the purchaser fails to remedy the breach or if the vendor
does not consider that the breach can be remedied, the vendor may seek an order
from the court to possess the land and rescind the contract.
(2) The fact that the notice served under subsection (1) does not comply in every particular with
the provisions of subsection (1) shall not—
(a) render it invalid so long as the purport of the notice is clear; or
(b) absolve the purchaser from the consequences of not responding to the notice.
42. Relief against rescission of contract for the sale of land
(1) If the vendor, after serving on the purchaser a notice under section 41, applies to the court for
an order for possession of the land or if the vendor has peaceably entered on to the land in
order to regain possession under section 39, the purchaser may apply to the court for relief
against the rescission of the contract either—
(a) in the proceedings for an order for possession; or
(b) in a proceedings brought by the purchaser.
(2) If the vendor has peaceably entered on to the land the purchaser shall apply for relief within
ninety days after the entry on to the land.
(3) The court may grant relief on such terms as it considers appropriate, including relief for breach
of any term or condition of the contract that is not capable of being remedied.
(4) An application for relief under this section shall not in itself to be taken as an admission by the
purchaser that—
(a) there has been a breach of the contract by the purchaser;
(b) by reason of the breach, the vendor has the right to rescind the contract;
(c) a notice has been duly and properly served on the purchaser; or
(d) the time for remedying a breach or for paying an amount by way of compensation has
expired, and the court may grant relief without determining any of those matters.
(5) Any, express or implied, term in a contract or other instrument to which this section applies
that conflicts with or purports to set aside or negate this sectionshall be inoperative.

A good and enforceable agreement will thus not only exhibit offer, acceptance, intention to be
bound, capacity, consideration and certainty (see: Michira vs. Gesima Power Mills Limited,
2004, 2 E.A. 168) in the terms but must also be in tandem with the provisions of Section 3(3) of
Cap 23.This section of Cap 23 is a must read for anybody aspiring to be an advocate].
In the latter case of the Act the sale agreement must be in writing, signed by both parties and
their signatures attested to.
The terms of the agreement apparently need not however be in one document.
Terms may be incorporated by reference (eg. the Law Society Conditions of Sale being made to
apply).
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See Sections 54 and 55 of the repealed ITPA also had certain implied terms which in the absence
of contrary agreements applied to open contracts.
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54.States that if there is no agreement to the 55- States that is there is no agreement to the
contrary, the vendor is under an obligation to: contrary, the purchaser is under an obligation
(1) disclose latent defects that he is aware to:
of; (1) disclose any value hidden that he is
(2) produce the title to the property, he aware of the concerns and touches the
must answer to the best of his property; and
information and knowledge all (2) pay the full purchase price at completion
inquisitions and pre-contract inquiries; and only retain the portion of the
(3) execute a conveyance as tendered by purchase price for purpose of
the buyer; discharging any encumbrance that hasn’t
(4) pay all outgoings and discharge all been discharged by the vendor.
encumbrances before completion;
(5) give possession to the buyer and all title Note: These conditions are not under the RLA,
documents to the buyer on payment of though the LSK General conditions of sale
the purchase price; have incorporated these conditions.
(6) take care of the property; and
(7) guarantee title to the property.

The Sectional Properties Act [Cf. ss 47 through 49] however dictates particular matters which
must be in the Sale Agreement where a sectional unit is being sold.
The agreement must of course also not be tainted with any illegality as the maxim ex turpicausa
non orituractio will be invoked.
Neither must the agreement be unconscionable. The new statutes have however kept faith with
the doctrine of freedom of contract and not prescribed any specific terms or conditions to be
incorporated in any contract.
It is possible though that the parties may have some pre contract negotiation documents in
place and prior to actual execution of the contract.
These include Heads of Terms, Term Sheets, MOUs and Letter Agreements [what are they and
are they binding once executed? Can either party enforce the same in a court of law or equity?]

An agreement must at whatever cost be certain. If agreement is not certain even if one
complies with statutory provisions the agreement will be void. See: Muchira v Gesima Power
Mills Ltd (2004) 2 EA 168

Muchira v Gesima Power Mills Ltd (2004) 2 EA 168

The COA held that any agreement that contains uncertain clauses is void and specific performance or
reliance on it for any remedy will not be allowed.

Facts: The vendor sold land to the purchaser for 10 million. The parties themselves drew the agreement.
The execution was witnessed by a qualified advocate. 10% deposit was to be paid on execution, 20% later
and balance within 90 days or when the title was produced in the purchaser‘s name. Possession was to be
granted on completion or when 20% was paid. Inter alia damage on default was 40% of 10 million. The
purchaser alleged default and sued for 4 million.
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Held: The CA held that the agreement was not enforceable even though it had met all the statutory
requirements. There was no consensus ad idem as there was no clear provision as to when the balance and
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possession would be given. The agreement was uncertain and specific performance could not issue.

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NOTE: Why didn‘t the court get rid of the uncertain provisions? It did not have a ‗saving clause‘
in case of inconsistency

1) Drafting and Engrossment

Whose responsibility?
i. The vendors advocate is to prepare the draft agreement and send it to the purchaser’s
advocate with the word DRAFT on it.
ii. Once approved, then the vendors advocate can prepare the endorsement i.e.
preparation of the legal document for execution. It is then engrossed.

Drafting the Sale Agreement

a) Objectives

Drafting has 6 main objectives

(1) Accuracy- embody client’s instructions

(2) Completeness- deal with all eventualities
(3) Preciseness-avoid ambiguities
(4) Clear-readily comprehensible
(5) Contemporary-use words in modern usage
(6) Short and simple- KISS principle (keep it short and simple)

b) Considerations

The following Consideration is important

(1) What does my client want to achieve?

(2) Do I understand the transaction?
(3) What is the most appropriate structure to achieve the client’s objectives
(4) Other matters:
a. Authority needed by parties
b. Tax implications
c. Other professional advisers
d. Proposed timetable
e. When is the contract to come to an end?
f. What could go wrong and which of the parties will bear responsibility?
(5) Summarize and seek clarification if necessary from your client.

c) Source Terms

The following are the Source Terms

(1) Terms required by statute
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(2) Terms required at Common Law

(3) Terms made necessary by external documents
(4) Terms fundamental to the operation of the transaction
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d) Planning

You need to Plan before Drafting:

(1) Have broad headings set out in a logical order. Start with major headings and expand into
clauses and sub-clauses
(2) Allocate a separate sheet for words and expressions that you will define as you draft
(3) Precedents-Should not be a substitute for thought analysis. Avoid grafting onto precedent
because:
a. It may not suit your client’s transaction
b. It adds to the length of the document
c. Little or no critical analysis to clauses
d. You are simply form filling not drafting
(4) Precedents should act as a checklist for relevant terms

e) Layout

Layout is also important

(1) Consistency of layout is key

(2) Clause
Sub-clause
Paragraph
Sub-paragraph
(3) Front sheet-date, names of parties and title of the contract. Also indicate if it is a draft.
(4) Table of Contents
(5) Recitals- Introductory words or preamble usually beginning with “WHEREAS” and each new
recital begins with “AND WHEREAS.” Recitals should not contain operative clauses.
(6) Expressions in block letters eg THIS CONTRACT, BETWEEN, WHEREAS, NOW THIS
DEED/CONTRACT WITNESSETH, IT IS HEREBY AGREED, IN WITNESS WHEREOF, PROVIDED THAT,
EXCEPT THAT, SUBJECT TO.
It is good for emphasis
(7) Headings-every clause should have a heading which describes succinctly what it is about so that
the reader can grasp the purpose of the clause and its subdivisions. It also enables the reader to
locate clauses quickly.
(8) Cross-referencing- you must keep track of them especially if the document has gone through a
number of drafts.
(9) Interpretation:
Inclusio unius est exclusio alterius- a provision expressed in specific or detailed terms will
be taken to indicate an intention to exclude anything not falling within the specific
words or detailed list.
Ejusdem generis rule: where general words follow specific words the general words are
restricted to the same category as specific words.
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Contra preferentum rule-an ambiguous provision, in the contract will be interpreted

against the party that imposed its inclusion in the contract.
Parole evidence rule- oral evidence of the drafter as to what they meant is not
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(10) Entire Agreement clause- a party may wish to ensure that no extrinsic evidence can be
admitted in relation to the agreement, that the agreement represents the only agreement
between the parties relating to the subject matter, that it supersedes and extinguishes any
other agreements between the parties relating to the subject matter.
(11) Definitions
A flawed definition can be far-reaching exposing your client to unintended results e.g
h=definition suits the word when used in one clause but not in another. Use words like
“in relation to” in describing the context.
Use definitions only where there would be doubt without them.
Usually in clause 1
Introduce definitions with words like, “except where the context otherwise requires”.
This will guard against errors resulting from a word being used in a sense other than the
one defined.
Use both open ended and close-ended definitions where appropriate. Example of open
ended- “Expenses- includes costs, charges and expenses of every description.”
Example of close ended- “Directors mean directors of the company for the time being.

(12) Abbreviations/nicknames- helps to ensure consistency and relieve the repetition of a

lengthy phrase eg James Smith Harry (hereinafter called “the vendor”)
(13) English is said to have been developed from French and Latin languages. Common Law
courts encouraged the use of a combination of synonyms or near synonyms to ensure that the
meaning of the words was not lost in translation. Hence the use of phrases like:
“Suffer or permit”
Last will and testament”
“Covenants and agrees”
Cease and desist
Null and void
Save and except
Peace and quiet
Force and effect
Are they necessary?

(15) “SIGNED SEALED AND DELIVERED”- Long time ago, contracts were not only signed by
the signor, but the signor’s seal was affixed and it had to be delivered to the other party for it to
be binding. This has since changed.
(16) Advocates still use the above terms to be “safe”. To avoid ambiguity they use words
precedents.
f) Final Consideration

i. Drafts- identify drafts; number the draft in the front page. Keep previous drafts
ii. Cross check definitions with the context in the main document
iii. Cross check all cross references
iv. Sleep on it- once you have completed the draft, take a break and look at it again with a fresh
eye.
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v. Check the draft again having a keen eye on dates, figures, names, punctuation, typos.
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g) Time is of the Essence

The general rule is that time is not of the essence unless the contract expressly provides so.
If the contract has a time is of the essence clause it means failure to act within the time required
constitutes a breach of the contract.
In Sagoo Vs Donorado (1983)KLR 366- time will not be considered of essence unless:
1. The parties expressly stipulate that conditions as to time must be strictly
complied with
2. The nature or the subject matter of the contract or the surrounding
circumstances show that time should be considered of essence
3. A party who has been subjected to unreasonable delay gives notice to
the party in default making time of essence
In David Mose Gekare Vs Hezron Nyachae (2007) eKLR it was held that these 3 tests were not
met and therefore time was not of the essence.

h) Representations and Warranties

Used by parties to provide information known to them

This clause has information that the other party relied on to make a decision to enter into the
contract
Example “ A represents that it has authority to enter into this agreement” or A warrants that he
has a good title to the property”

i) Conditions Precedent

If there is a condition precedent, then whatever it is that constitutes this condition must be
satisfied completely before the contract becomes effective.
Eg “the Vendor shall ensure that she has a registered title before the execution of the
transfer”

j) Avoid Bad Phrases

Illusory consideration/promise
Appears to be a promise but is not a promise. “ I promise to do it but am not obliged to
do it and you cant have a remedy if I don’t do it”
The promise appears to be discretionary if examined closely
Incompleteness
Agreement to agree- not enforceable must be backed with a mechanism or formula to
resolve the failure to agree. Also falling in this category are terms creating an agreement
to contract, an agreement to negotiate.
Uncertainty
Courts try to ascertain intention of parties where there is ambiguity.
The Court may severe the clause if it is considered too ambiguous or declare the whole
contract void if the ambigous term is central to the agreement
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2) CONTENTS OF A SALE AGREEMENT

In general an ordinary Sale Agreement will contain five parts namely

i. the parties
ii. particulars of sale
iii. special conditions
iv. general conditions and
v. execution.

The above Five Parts can be narrowed further into 2 parts

Contract for sale of land has 2 parts:
The particular sale which include the description of property
Special conditions
Generally Special; conditions relate to:
Capacity of the vendor
Payment of deposit
Payment of balance and interest on unpaid purchase price
Payment for chattels and fixtures
Possession before execution
Time and schedule within which the matters affecting the title must be dealt with
Date of completion
Exceptions and reservations
The risk and liability for insurance pending completion
Power of vendor to rescind the contract
Power of either party to serve Completion Notice
Make sale subject to mortgage, consents, LSK conditions of sale

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SUMMARY CONTENTS OF A SALE AGREEMENT

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MODEL SALE AGREEMENT

1) Parties
If a company the description should have successors and assigns, if a society it should be
registered under the Societies Act, if personal it should state personal representatives and
assigns and it should state the agreement is between X & Y

2) Definitions and interpretations

Vendor and purchaser, singular and plural, definition of person to include legal and artificial
persons, headings etc

3) Law Society Conditions of Sale (General conditions)

It is not mandatory to incorporate them. You could exclude some or allow some or include
all. You can also vary the LSK conditions and you can add more details. You must specifically
state which LSK conditions to incorporate i.e. 1972, 1982, 1989,2015 NOTE – there is a need
to amend the LSK conditions especially in light of new developments.

4) Agreement for Sale and interest sold

You incorporate the offer and acceptance i.e. vendor agrees to sell and the purchaser agrees
to buy.

5) Purchase price and Deposit

That is consideration that supports the contract. State it explicitly. If by way of gift, it should
be so stated. It must also state the acknowledgment of receipt of the consideration. Deposit
is ordinarily 10% of the purchase price and ought to be paid before or on execution of the
contract. For deposit state when it is to be paid, by who and to whom.

6) Completion and completion documents

That is the purchaser is to deliver the purchase price and the vendor is to deliver the
completion documents. The date of completion must be stated i.e. time is of essence.
Provide for place of completion usually at the vendor‘s advocates office. Where there is a
financier, a professional undertaking is given instead of the money/cheque. One also has to
state vacant possession. Completion documents include title documents, Clearance and
Consent certificates, executed transfer, photos, consents, stamp duty valuation forms.

7) Special condition (s)

Sui generis clauses
Variation of general conditions

8) Capacity
Legal competence for a person to sell e.g. if selling as an attorney, administrator, agent,
beneficial owner
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9) Possession and movables

10) Matters affecting the Property
11) Outgoings and income of the Property
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12) Assignment

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That is the transfer of the whole interest in the property. This is also referred to as the
conveyance clause in a sale agreement. Assignment may be of the transfer or of the
obligations and rights of the parties.

13) Default
On omission or failure to perform a legal or statutory duty under the contract. This clause
addresses what happens in the event of breach e.g. in case of default, a party will pay a
specified liquidated amount in damages.

14) Non-merger
The clauses should be read as distinct and separate such that in the event that one is null
and void, it should be severed and will not affect the others. At completion it was deemed at
common law that everything is closed such that if there were any other agreements they
would be closed i.e. do not inherit obligations of the vendor at the completion of the sale
agreement. The agreement does not merge the sale agreement with the conveyance itself.
Read LSK condition 27.

15) Stamp duty and related costs

This is based on the value of the property in question. Registration charges are paid at the
lands registry and are not pegged on the value of the property. The advocates fees must also
be catered for and each party bears the cost of their own advocates, (if a purchaser is
obtaining advances from a financial institution, the costs are borne by purchaser). Search
fees to confirm registration of the property in purchaser‘s name. LSK condition 30.NOTE:
Stamp duty is usually paid by the person acquiring the interest. Commissions should be given
negative obligations i.e. the vendor shall not be liable for any commissions whatsoever.

16) Disclaimer
Provides for under the LSK Condition 14 clause 5. It embodies the caveat emptor doctrine i.e.
buyer beware.It is the equivalent of an exclusion clause stating the vendor shall not be called
upon to point out irregularities in the property. (Q. Whose interest is being protected? One
needs to inspect the contract and carry out pre-contract inquiries)

17) General
One needs to put any general obligations in this clause. One may put saving clauses, how and
when payment is to be made, whether the amount would be net or gross. One may also
include a clause on whether the agreement, if it is to be varied, should be varied in writing or
any other way.

18) Intention to be bound

This is a conclusion to the agreement where the parties are of one mind. It is just before the
execution clause. It is the parties affirmation to the contract especially in relation to the law
of contract act.
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19) Miscellaneous Clauses and Provisions

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1. if a party has not exercised their right or power or remedy does delay in exercising
such a right or power that does not mean that they have waived the right; Partial
exercise of the right or remedy does not mean that you are not entitled to further
exercise of such a right.
2. The remedies are cumulate and not exclusive of any remedies provided in law (law of
contract)
3. That if any term or condition in the agreement shall be found invalid and
unenforceable this does not invalidate all the agreement, the rest of the terms and
conditions of the agreement shall be valid and enforceable to the fullest extent
permitted by law. In such a case you do a variation of that clause by a further
agreement which is to be annexed to the original agreement.

20) Execution

This is the affixation of one‘s mark on the document. It may be by way of signature, thumb
print or a duly appointed attorney of a company or by a common seal. The parties have to
authenticate the document. One must state the capacity in which the parties are executing
the document.

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SAMPLE SALE AGREEMENT –SIMPLE

THIS AGREEMENT FOR SALE is made this day of Two Thousand and
Eleven BETWEEN JOEL WAWERU GACAU of Post Office Box Number 50090-00200, Nairobi in
the Republic of Kenya (hereinafter called “the Vendor” which expression shall where the
context so admits include his personal representatives and assigns) of one part AND PAUL
MBATIA MBIYU of Post Office Box Number 34010-00100, Nairobi in the aforesaid Republic
(hereinafter called “the Purchaser” which expression shall where the context so admits
include his personal representatives and assigns) of the other part.

WHEREAS:

The Vendor is registered as the proprietor of the leasehold interest of ALL THAT piece of
land known as Land Title Number NAIROBI/BLOCK 133/263.

AND WHEREAS

The Vendor has agreed to sell and the purchaser has agreed to buy ALL THAT piece of land
known as Land Title Number NAIROBI/BLOCK 133/263.

NOW THIS AGREEMENT WITNESSETH AS FOLLOWS: -

1. The property sold is ALL THAT Piece or Parcel of Land known as Land Title Number
NAIROBI/BLOCK 133/263 together with the improvements erected and being thereon.

2. The interest in the property being sold is leasehold.

3. The Purchase price is Kenya Shillings Twelve Million (Kshs. 12,000,000/=) only which shall
be paid to the vendor through the vendor’s Advocates Account Number 0102095808000 at
Standard Chartered Bank, Koinange Street, Nairobi as follows;
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(i) A deposit of Kenya Shillings Three Million (Kshs. 3,000,000/=) only on or before the
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execution of this Agreement (the receipt of which sum is hereby acknowledged by

the Vendor). The said sum of money shall be held by the vendor’s Advocates as
stakeholders pending completion.

(ii) The balance of the purchase price in the sum of Kenya Shillings Nine Million (Kshs.
9,000,000/-) only on or before the completion date.

4. The Sale is subject to the Law Society Conditions of Sale (1989 Edition) in so far as they
are not inconsistent with the Conditions Contained in this Agreement.

5. The completion date is Ninety (90) days after the execution of this Agreement.

6. The Vendor’s Advocates are M/S MUNENE WAMBUGU & COMPANY ADVOCATES, VIEW
PARK TOWERS, 12TH FLOOR, WING C, UTALII LANE, P. 0. BOX 2027 – 00200 NAIROBI.

7. The Purchaser’s Advocates are M/S WALUBENGO WANINGILO & COMPANY ADVOCATES,
UFUNDI PLAZA, 10TH FLOOR, MOI AVENUE/MOKTAR DADDAH STREET, P.O. BOX 7917-
00100 NAIROBI.

8. The property is sold in the same state or condition as it is at the date hereof and the
Purchaser has inspected the property to his satisfaction save that before completion date
the vendor shall ensure that the Jua Kali mechanics currently on site shall vacate the
property.

9. The property is sold subject to the provisions of the Law under which it is held and
Special Conditions (if any) contained in the title but otherwise free from all
encumbrances.

10. On or before completion date the Vendor shall deliver to the Purchaser the documents
listed hereinbelow: -
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i) The original certificate of lease in respect of the property.

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ii) Duly Executed Transfer Document in favour of the Purchaser and/or his nominee.

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iii) Consent to transfer.

iv) Valid Land Rent and Land rates clearance certificates

v) Duly completed and signed form for Valuation of Stamp Duty.

vi) A copy of the Vendor Pin Certificates, Identity Cards and Three (3) coloured
passport size photographs.

vii) Any other documents of Title in respect of the above property which are in the
vendor’s possession.

11. If the purchase price is not paid in full on or before the completion date, the Vendor shall
either rescind this agreement for sale and reimburse to the Purchaser the already paid
deposit on purchase price less 10% of the purchase price or extend the date of
completion of the Sale Agreement for such period as he may decide whereupon the
unpaid balance of the purchase price shall attract interest at the rate of 10% per annum
from the date of completion to the date of full payment of the balance of the purchase
price.

12. If this sale is not completed on or before the completion date or the registration of the
Transfer documents in favour of the Purchaser is rejected and/or refused due to any
default on the part of the Vendor or anomaly on the title document then the Purchaser
shall (and without prejudice to any other claims and remedies they may otherwise have
against the Vendor) be entitled to reimbursement of all the then paid Purchase price
together with interest at the rate of 10% per annum from the date of completion until
payment in full.

13. All rates, taxes, and other outgoings upto the date of completion shall be paid by the
Vendor and thereafter by the Purchaser and the same shall be apportioned as at the
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completion date.
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14. Each party shall meet the cost of his Advocates in respect of this Agreement and of the
Transfer but the Stamp Duty and Registration Fee payable in respect of this transaction
shall be paid by the purchaser.

IN WITNESS WHEREOF this Agreement has been duly executed by the parties hereto the
day and year first hereinbefore written.

SIGNED by the said VENDOR )

JOEL WAWERU GACAU ) ………………………………………………
) I.D. NO. 5546286
In the presence of: - )
)
)
)
SIGNED by the said PURCHASER )
PAUL MBATIA MBIYU ) ………………………………………………
) I.D. NO. 0126003
)
In the presence of: - )
)
)
)
DRAWN BY: -
MUNENE WAMBUGU & COMPANY,
ADVOCATES,
VIEW PARK TOWERS
12TH FLOOR, WING C
UTALII LANE
P.O. BOX 2027- 00200,
NAIROBI
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1. PARTIES

This is self-explanatory.
The parties to the contract as well as their addresses must be properly stated in the
contract.
The address is crucial in the event that there will be need to issue a notice to either party.
It is important that the parties to any contract are properly identified.
[It is not necessary that only parties to a contract are those who must get some benefit
there from or shoulder some obligation]

2. PARTICULARS:
This entails a description of the subject property.
Both the physical and legal description of the property are given in the particulars of sale.
Encumbrances, if any, also constitute part of the property definition.
Occasionally, fixtures and fittings will form part of the particulars of sale.
Finally the consideration (purchase price) will be part of the particulars.
The position on encumbrances i.e. the property is sold free of encumbrances.
If there is an encumbrance, you must indicate who is to service the loan/discharge the
encumbrance.
You must state that the purchase price will be used to offset the balance of the
encumbrance/loan.
Leave nothing to interference. Also define the interest/tenure sold e.g. freehold, leasehold etc.
You must indicate the correct LR Number
You must also indicate the position on encumbrances i.e. the property is sold free of
encumbrances. If there is an encumbrance, you must indicate who is to service the
loan/discharge the encumbrance. You must state that the purchase price will be used to offset
the balance of the encumbrance/loan. Avoid allowing the clause “sold subject to all
encumbrances…”
Ss. 2 and 3 RLA provide for sale of land plus that which is attached to it. A fixture is something
affixed to land by a human (not like a tree). You must find out if property is being bought
including the fixtures and fittings i.e. they do not attract stamp duty. If you do not, the vendor
may argue that he is entitled to remove the fixtures and fittings. You could have a schedule
listing out the fixtures and fittings being bought indicate the value of the fittings.
The transfer should have a price less the value of fixtures and fittings. See Wake v Hall [1882]
AC 195 Blackman J stated “the degree of annexation is what matters”
See also Ellitestone Ltd v Morris [1997] 1 WLR 687 -Held: It is not just the degree of annexation
that matters but also the object of annexation that matters. If the fixture is annexed for
purposes of better enjoyment of the property it is assumed to be a fixture BUT if it is annexed
for the purposes of the item itself it is a fitting.
NOTE – the fixture forms part of the land BUT the fitting does not form the subject matter of the
sale agreement.
The answer to the question whether a structure or an item has become a part and parcel of the
land itself depends on the degree of annexation as well as the object and purpose of annexation
and the test is objective. Land is no longer looked at from the perspective of that latin maxim of
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quic quid plantatur solo solocedit. It may be critical to ensure that one adequately provides for
fixtures and fittings in any Contract as they may affect the stamp duty payable.
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Doctrine of Annexation

The Second maxim is quicquid plantatur solo solo cedit –this approach to defining land is by
relating land to what is attached to it. It means “the surface, buildings or parts of a building and
whatever is attached to the land becomes part of the land.
This approach also has limitations and exceptions. It raises complex legal questions as to what
constitutes fixtures thus part of realty, and those which are not thus remaining
personalty/fittings.
Two tests have been consequently been employed in distinguishing fixtures from fittings

i. The first test relates to the degree of annexation. Fixtures have been described as comprising
those material objects which as a matter of law, merge with the freehold either by reason of
their physical bond with existing land or by reason of their highly purposive juxtaposition with
such land. In other words if an object is annexed to the land prima facie it is fixture. See the
following cases.

Mukuru Munge v Gilead Mwanyasi [2006] eKLR

Where the Judge stated that it is a time honoured principle o f real property that land includes fixtures
there on. That principle is adequately summarized in the latin maxim –quicquid plantatur solo,solo
cedit,which means that whatever is affixed to the soil belongs to the soil.

Compare this three cases

Holland vs Hodgson (1872) LR 7 CP 328

Spinning looms bolted to the floor of a factory attached to the land other than by their own weight was
held to be a fixture.
Hulme vs. Brigham
A heavy printing press which stood on the floor without any attachment other than the force of gravity
was held to be a fiiting
Chelsea Yacht & Boat Co. vs Pope [2001] 1 WLR 1941
A house boat moored to the bank and which moved up and down with the tide was held to be a fitting

ii. The Second test for distinguishing a fixture from a fitting is whether a chattel has been affixed to
the land for the better enjoyment of the object as a chattel or for a more convenient use of the
land; this can also raise some confusion because an object may constitute a fixture in one case
but a chattel in another. See the following cases

Leigh vs Taylor [1902] AC 157

Tapestrie nailed onto a wall were held not to be fixtures.

Re Whaley [1908] 1 Ch.615

Tapestrie nailed onto the wall were held to be fixtures

Elistone Ltd vs Morris [1977] 1 WLR 687

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The House of Lords has since confirmed that what is of primary importance is the intention involved.
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NB: It is important to distinguish whether the object was intended for the use or enjoyment of
the land, in which case it passes as a fixture or for the more convenient use of the object itself,
in which case it passes as a fitting.

3. SPECIAL CONDITIONS

These are those terms which are peculiar or specific to and relevant to the contract in question.
They will involve issues of vacant possession, deposit, fixtures and fittings, remedies in the event
of default, contract being subjected to a mortgage facility, variation of general conditions, etc.
They are those conditions which apply sui generis to each agreement. They are being extended
to mean the variations of the general conditions. For this reason it forms a separate part of an
agreement.
Examples
i. where the contract price includes the value of the fixtures and fittings sold separately
ii. where the fact is that the property is sold subject to a mortgage
iii. where the fact is that the sale agreement is conditional upon the vendor receiving duly sealed
letters of administration or probate

In such cases you may have a clause titled special conditions.

A sale agreement (if the LSK conditions apply) will be completed within 42 days of obtaining
consent.
This is a special condition which varies the general conditions of sale.

4. General Conditions

These are terms which in the absence of any specific terms apply generally to the open
contract.
They came from implied terms which have been complied together from common law,
equity as well as conveyancing practice generally.
Section 55 of the ITPA contains examples of such general terms.
Likewise the LSK Conditions of Sale now in its third edition is an assembly of the general
terms and conditions.
The general conditions apply also to fill up gaps in a contract and cover a variety of matters
e.g. Regulating right to rescind, preparation and content of transfer, possession and grant,
deposit and forfeiture, notices and completion.
The Sale Agreement will always be drawn by Vendor‘s Advocate (see Salim –vs- Okongo,
1976 KLR 42, LSK Condition 24).

24.Conveyance
(a) The conveyance shall be prepared by the purchaser and delivered to the vendor for perusal and
approval not less than Fourteen (14) days before the completion date.
(b) The engrossment of the conveyance for execution shall be delivered to the vendor within Seven (7)
days of its agreement.
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(c) Delivery of a draft or of an engrossment of a conveyance does not waive an outstanding requisition.
(d) Where the sale is to be carried out by a lease or an under lease, the vendor may furnish a form of
lease or under lease from which the draft can be prepared and may charge a reasonable fee not
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(e) On payment of the purchase money, the vendor will execute a proper conveyance of the property
to the purchaser and will deliver to the purchaser a rates clearance certificate and where applicable,
a land rent certificate in respect of the property valid for a period expiring not earlier than the
completion date.
(f) Where the vendor so requests, the purchaser shall execute the conveyance in duplicate. The
duplicate shall be stamped together with the original and shall be delivered to the vendor after
registration.

5. CONSIDERATION

a) Deposits
It is usual for a contract to provide for the payment of a deposit by the Purchaser upon or before
execution of a contract.
A deposit is part of the agreed purchase price.
There is however no common law provision entitling the Vendor to demand or require the
Purchaser to pay a deposit.
Indeed Section 55 of the ITPA provides for the purchase amount to be delivered on completion.
Therefore a special condition to this effect must be inserted in the contract.
This customary requirement has however seen the Law Society of Kenya Conditions of Sale
provide expressly for the same at Condition 3, effectively meaning that even if not expressly
provided for as a special condition it will be implied unless expressly excluded.
The Law Society of Kenya Conditions at the interpretation part has also adopted the customary
“10% of the purchase price”.
Thus a “deposit” is defined as: “ten (10) per centum of the purchase money excluding the price
of movables, livestock, chattels, fittings and other separate items Law Society Conditions of
Sale.”

It is thus basically implied in each contract in Kenya.

You can however contract out of it by way of a special condition and this is often done especially
where the Purchaser is being fully financed.
The amount of deposit (i.e. the customary 10%) can also be varied but care is to be taken not to
accept anything less once the variation is effected.
Thus if you agree on 20%, as the Vendor’s Advocate you should not take 10% otherwise liability
for any losses on your client may befall you.
Payment is ordinarily made to the Vendor’s Advocate or to the Estate Agent who introduced the
Purchaser.
The Law Society of Kenya Conditions require payment to be made by bankers draft but it is now
perfectly acceptable to take a client account cheque and it is to be banked in the client account
too. From client account to client account.
Where the deposit amount exceeds Kshs. 1,000,000/= payment is to be effected by way of
electronic transfer or RTGS.
Often this payment has been varied to be made to the Vendor and this may be pretty risky.
There is need to provide very carefully in such situations; like in estate covenyancing or sales by
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developers.
None payment means that the contract if already signed is repudiated upon notice. It is
however always paid before the Vendor signs the contract and care needs to be taken to ensure
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NATURE OF DEPOSITS

1) A deposit is security for completion. It is an earnest to bind the bargain and the fear of its
forfeiture creates a motive on the part of the Purchaser to complete. The Purchaser will not
capriciously change his mind. It sort of guarantees performance.
2) It constitutes part of the purchase price
3) It is a security or guarantee for purposes of completing the agreement. It is more than part
of purchase price. It guarantees the vendor that the purchaser shall complete the
agreement. If the purchaser is unable to complete the vendor is entitled to exercise his right
of forfeiture and forfeit the deposit.
4) The deposit also entitles the purchaser to a buyers lien over the property for the amount of
the deposit paid but only if that deposit has been paid either to the vendor or to a vendor’s
agent but not to a stakeholder. It is recognized that as between the purchaser and the
vendor there is some symbiotic relationship. This symbiotic relationship is such that one is
entitled to go to court on the basis of the sale agreement and the deposit paid asking for the
property to be transferred to a third party to hold as trustee as lien pending a refund of the
deposit, where possession has not been granted.
5) Non-payment of a deposit as agreed means there is fundamental breach of the contract on the
part of the Purchaser and the Vendor is entitled to rescind the contract. Under the Law Society
of Kenya Condition 3 rescission will only take place after notice to the Purchaser.

3.Deposit
The purchaser shall, on or before entering into the contract, pay to the vendor’s advocate or the estate
agent negotiating the sale on behalf of the vendor as stakeholder such a sum as will, together with any
preliminary deposit paid to the vendor or such agent, amount to Ten (10) per centum of the purchase
money (excluding any separate price to be paid for moveables, livestock, chattels, fittings and other
separate items). Such sum or sums shall be paid either by banker’s draft or by a cheque drawn upon an
advocate’s client account. In the event that the draft or cheque is dishonoured upon first presentation,
the vendor shall have the right, exercisable at any time prior to the completion date by notice in writing
to the purchaser, to elect to treat the dishonour as a repudiation of the contract by the purchaser. Upon
the giving of such notice, the contract shall be null and void for all purposes.

6) A deposit also counts as part of the purchase price on completion. The Purchaser’s advocate is
at completion expected to formally authorize the release of the deposit to the Vendor.
7) Deposits also help create the symbiotic relationship between the Purchaser and the Vendor. It
helps to entitle the Purchaser to a lien enforceable by the courts over the property.

CAPACITY OF HOLDER

Under the general conditions (LSK Cond. 3), the holder of the deposit whether Estate Agent or
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Advocate always holds the same as a stakeholder.

The agreement can however provide that you hold as agent for the Vendor.
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As an Agent, you hold the money to the order of the Vendor whether you are acting for the
Purchaser or the Vendor himself and the Vendor in such a case has a proprietary interest in the
funds.
Upon his demand you have to release to him unless the agreement specifies otherwise.
In such cases the funds may be utilized to his benefit i.e. clear outgoings without necessarily
asking for provision.
A Stakeholder holds the deposit to the order of both parties. He holds the same in trust to
ultimately deal with it in different ways in different contingencies.
Pay to the Vendor if the sale is completed. Pay to the Vendor if the Purchaser defaults. Return
to the Purchaser if the Vendor defaults.
Safety is the Stakeholder’s responsibility. You mishandle the same you pay it. You deposit it in a
“collapsing” bank you pay.
Deposit it in a client account unless urged to do otherwise by the parties. As neither the
Purchaser nor the Vendor has any proprietary claim any interest earned can actually be kept by
the Stakeholder (as reward for holding the stake?) unless the contract states otherwise.
As a stakeholder if the Purchaser consents you may use it as another “earnest” for the purchase
of another property.
In the event of insolvency of holder various difficulties may arise. Who bears the loss? The
Vendor or the Purchaser?
It there is a binding contract the Vendor bears the loss as he “who nominates the principal
accepts the risk”.
If it is insolvency of the Vendor, the Stakeholder must refund the Purchaser. If there is
insolvency of the vendor and the deposit is held by an Agent then the Purchaser loses out as the
money was, strictly speaking, the Vendor’s.

FORFEITURE

If the Purchaser is in breach of the contract and is unable to complete the contract, the deposit
is forfeited to the Vendor even if held by a Stakeholder.
The Vendor is also discharged from the contract.
The Vendor may however opt for specific performance in which case the deposit will still count
as part of the purchase price, although the Vendor will ask for damages too.
Forfeiture however does not apply where the purchase price is paid rather by way of
instalments and there is no deposit (especially in estate conveyancing) but you may however
provide for part forfeiture.
Courts will ordinarily not intervene unless the deposit was more than the customary 10%.
[Reflection: what reforms would you propose to the issue of Deposits in sale transactions if
any?]
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b) Payment of the Balance of the Purchase Price

To guarantee that every one vendor and purchaser will meet their end of the bargain,
conveyancing for most part is done through the issuance of a Professional Undertaking

PROFESSIONAL UNDER TAKING

In the course of most conveyancing transactions it is common for advocates to enter into
written agreements to do or refrain from doing certain things. These are called professional
undertakings.
These agreements help speed up the process of conveyancing. It helps circumvent problematic
areas. From a viewpoint of a professional it should be noted that:
1) An undertaking creates a legal obligation upon the advocate which is enforceable by courts by
way of mandatory injunctions and court orders. In this respect, the ability to enforce a
professional undertaking is vested solely on the courts. All courts over the world have a
supervisory jurisdiction over its officers. It is on this basis that courts can enforce an
undertaking. O.LII CPA & Advocates Act expressly allow the court to enforce an undertaking and
make such orders as it deems appropriate to enforce the undertaking e.g. order a fine, jail term
etc
2) The giving of a professional undertaking by an advocate places on him an ethical obligation to
comply with the same i.e. undertakings are deemed sacrosanct. The LSK is usually the body
concerned with ethical conduct of an advocate and this ethical side of undertakings gives the
undertaking its value. LSK can, if it finds you guilty of breaching an undertaking, fine you,
suspend you or even strike your name off the Roll of Advocates.

Definition of Undertaking
This is an unequivocal declaration of intention addressed to someone who reasonably places
reliance on it and made by an advocate or a member from an advocate’s firm in the course of
practice or made by an advocate as an advocate though not in the course of practice.
It is a promise made by the advocate to do or refrain from doing something. It does not matter
what you promise to do or refrain from doing you will be bound.
You must weigh whether the undertaking you give is within your control and you will be willing
to honour it.
There is no limitation, the undertaking could be oral or in writing and it will still be binding and
enforceable.
However, it is important to put them in written form so as to avoid misunderstandings on your
part and on the recipient’s part and for evidential purposes.
Ensure that you are aware of all undertakings sent out by members of your staff because you
would still be bound.
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Undertakings given on email may be risky since they can be easily amended and normally have
disclaimers. Faxes are fine.
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Always consider what you are undertaking. KCB v Adala [1983] KLR 487

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Undertaking in favour of a layman enforced – The undertaking was not directed to an advocate
but was enforced against the advocate.
Because the promise is given by an advocate he is personally bound by it even if e.g. your client
dies or becomes bankrupt. You must always consider if you have control over the undertaking.
You may have to give a qualified undertaking if in doubt of enforcement of the undertaking. E.g.
I will pay you Kshs X upon receipt of the same from my client. Also consider the conditions you
impose.

INGRIDIENTS OF A PROFESSIONAL UNDERTAKING

Unequivocal declaration of intention by an advocate

Addressed to someone
Places reliance on it
Made personally by an advocate in the course of practice or as an advocate or by a member
of staff
It is simply a promise made by a solicitor or on his behalf by a member of his staff to do or
refrain from doing something. It is one of the ways of completing a sale transaction.
WHY IS IT GIVEN
Given by lawyers to smoothen and hasten the process of transactions.
They create bridges without which a transaction may never be completed banks would not
release funds without registration of transfer or mortgage.
The Vendor on the other hand faces the risk of losing his property to a purchaser who may
fail to release the purchase price after registration.
INSTANCES
Examples of or instances of undertakings in conveyancing
1. Vendor’s Advocates undertaking not to release the purchase price to Vendor pending actual
registration of the Transfer.
2. Purchaser’s Advocate undertaking to hold completion documents to Vendor’s order pending
payment of the purchase price.
3. Purchaser’s or Purchaser’s financier’s undertaking to pay the secured balance of the
purchase price within a specified period of receipt of the registered security (charge or
mortgage) documents.
4. Chargor’s or Chargee’s Advocate undertaking to pay the loan proceeds upon registration of
the Charge plus/or transfer simultaneously.
5. Chargor’s Advocate undertaking to pay the redemption amounts upon registration of the
discharge.
6. A Vendor’s Advocate undertaking to release the completion documents upon receipt of the
balance of the Purchase Price paid via electronic transfer( RTGS).
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BRIDGING OF COMPETING INTERESTS

PUs involve arrangements for

or settlement such as
Payment of purchase monies
Loan funds
Discharge of obligations
Accounting to the other party for documents in return

An undertaking by an advocate is subject to supervision by the Court, the breach of which

amounts to professional al misconduct which is enforceable in Court for breach of contract.
Professional Undertakings are based on mutual trust.
The concept of implied undertakings as known in common law also applies e.g. to return
documents held should registration fail.
Care should be taken in responding to requisitions such that sufficient particulars of the specific
charges or mortgages the subject of a PU should be given e.g. avoid st statements
atements like ―an
undertaking will be given as to how outstanding mortgages will be dealt with‖- with what if some
mortgage not the identified before emerges after a search?
PUs ought to be given to professionals not to laymen. They ought to be in writing although
alth no
law bars oral undertakings.
The giver and recipient don‘t have to be in an advocate/client relationship (See ( Bridge up
Containers Services vs. Gichana Bw’omwando t/a GichanaBw’omwando& Co. Advocates,
Misc. Civ. App. 386 of 2006).
Law Society of Kenya enya ―Digest of Professional Conduct and E^quece‖ provides that an
undertaking shall be in a form which is clear and once accepted by an Advocate shall bind him or
his firm to the undertaking and any breach thereof shall constitute professional misconduct‖
misconduc
Naphtali Radier vs. D Njogu& Co. Advs - An advocate is obliged by law as an officer of the Court
160

to honour his professional undertaking. Failure to honour= professional misconduct. In the UK- UK
Advocates cannot give uninsured undertakings. In Kenya advocaadvocates
tes are faced with the dilemma
of losing a client (e.g. banks) or issue a non funded PU. IS
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IS IT A CONTRACT?
It places both a legal and ethical obligation on the giver.
In Peter Ng’ang’a Muiruri vs. Credit Bank & Charles Nyachae t/a Nyachae& Co. Advocates
(Civil Appeal No. 263 of 1998-Court of Appeal Nairobi)- the Court held that an undertaking is a
solemn thing, in enforcing it the Court is not guided by considerations of contract but the Court
aims at securing the honesty of its officers. An undertaking must be clear, unambiguous and
certain and without conditions precedents .
See Kenya Re V MugukuMuriu t/a Muguku Muriu& Co. Advocates (Civil Appeal No. 48 of 1994)
.
See Kimaru J’s ruling in Pyrethrum Processing Co. Ltd vs. Rogers Shako Adv. HCC 148 of 2004-
an undertaking is a form of trusteeship .
See Onyancha J‘s ruling in David Muema vs. Victor Mulee (eKLR 2007)- undertakings should be
looked at from an ethical point of view.
See DK Thou & Co. Advs vs. Njagi Waweru& Co. Adv. HCC No. 209 of 2008- Justice Njagi
refused the Advocates‘arguments that he was entitled to a lien over the funds.

Undertakings have become a very important aspect of the practice of law in the jurisdiction. In
conveyancing, they are used to expedite matters which, in the absence of undertakings, would
cause considerable delay and inconvenience to the client and the practitioner.
They also create bridges without which conveyancing transactions may never be concluded.
Primarily, the undertakings may create a legal obligation upon the Advocate which is
enforceable by, for example, mandatory injunction.
The primary concern of the Law Society should be to alert the profession to the requirement of
having the client’s prior authority before the issue of the undertakings.
Of equal importance, the giver of the undertaking must be satisfied of his or her ability to
comply with his undertaking and be alert to the outside agencies or events which may affect this
ability.
It is also felt necessary to alert the profession to the Society’s role in relation to undertakings.

TYPES
1) The gran^ng advocate is able to personally fulfil the stated obliga^ons e.g. ―...to hold the
documents to your order returnable on demand.....‖
2) The granting advocate‘s promise can only be fulfilled by the lawyer‘s client (see the case of Harit
Sheth t/a Harit Sheth Advocates vs. K.H.Osmond t/a Osmond Advocates Civil Appeal No. 276
of 2001 CA NBI)

RATIONALE PURPOSE AND VALUE

1) Undertakings are a necessary part of the practice of law. They are promises which keep the
transaction or the process moving forward to a just conclusion. These promises must be based
on the trust that solicitors and clients have in the integrity of all members of the profession
(Ellyn, Nadine and Barmaria )

2) Re Hilliard (1845) 2 Dowl. & L. 919 at 920-921

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Re Hilliard (1845) 2 Dowl. & L. 919 at 920-921

‘undertakings generally benefit both parties [to a transaction or lawsuit] and there would be a great
injustice in letting the attorney loose from them after the [other] party has forgone the advantage or
paid the consideration, while there is no hardship on the attorney in enforcing them, he is never
compelled to enter into them. If he does, he should secure himself by his arrangement with his client,
and he must be taken to know the legal consequences of his own act’.

3) The Law Society of British Columbia v. Heringa 2004 BCCA 97

Law Society of British Columbia v. Heringa 2004 BCCA 97

The trust and confidence vested in lawyers’ undertakings will be eroded in circumstances where a
cavalier approach to the fulfilment of undertaking obligations is permitted to endure. Reliance on
undertakings is fundamental to the practice of law and it follows that serious and diligent efforts to meet
all undertakings will be an essential ingredient in maintaining the public credibility and trust in lawyers.

4) A tool used in the course of the practice of law

5) Demonstrates the integrity which is the foundation of the legal profession
6) Can create a framework to enable transactions to proceed which might otherwise be stalled
7) Permits a lawyers solemn promise to perform to temporarily take the place of a document,
information, signature, payment or other act of performance
8) Can be used to facilitate file transfers
9) Can be used before courts especially to facilitate discovery and compliance with court orders
10) Can be used to facilitate conveyancing transactions

GUIDELINES OF PROFESSIONAL UNDERTAKING

1) Breach of an undertaking is prima facie evidence of misconduct – the LSK will expect the
enforcement as a matter of conduct. Failure to honour a professional undertaking is
professional misconduct. The LSK only expects that you honour the undertaking BUT it will not
enforce the undertaking.
2) Undertakings are normally expected to be honoured between the giver and the recipient only.
Undertakings are NOT saleable commodities. Neither the court nor LSK will be anxious to
entertain complaints by people who are interested in the performance of the undertaking but
were not recipients. However, the residual power to enforce the undertaking vests in the court
and could listen to a party who was not a recipient. See the following cases
KCB v Adala
Enforcement of the undertaking is with regard and touches on the honour and honourable conduct of
the members of the noble profession. The court will not hesitate to allow non-recipients to benefit from
the supervisory jurisdiction of the court;
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Naftali Radier v Njogu t/a Njogu Advocates & Co HCCC 532 of 2002;
An advocate on the other hand cannot assign an undertaking without the recipients consent.
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Ron Otieno v AGN Kamau & Co Advocates HCCC 134/03

The defendant‟s advocates had given an undertaking under their former name which partnership had
since been dissolved; when the plaintiff sought to enforce the undertaking Mr. Kamau argued that a
former partner Ms Kimani walked away with some liabilities including the undertaking. Held: the
undertaking was joint and several i.e. personal to Mr. Kamau and he could not walk away from it

3) Undertaking must be certain. If ambiguous it will normally be construed in favour of the

recipient. This rule exists to prevent reconstruction of the undertaking by the giver to avoid
obligations and liabilities.
4) Proper wording of the undertaking is important because no extraneous evidence. No terms will
be implied/extraneous evidence allowed in an undertaking. See Karsam Lalji v P. K. Kimani t/a
Kimani Kairu & Co. Advocates CA 135 of 1999

Karsam Lalji v P. K. Kimani t/a Kimani Kairu & Co. Advocates CA 135 of 1999
Advocate ordered to pay monies owed under an undertaking together with interest although no interest
was provided under the undertaking

READ:
Kenya Finance Co v Ng’eny and Anor [2002] 1 KLR 106

5) An undertaking need not constitute a legal contract. It need not have consideration for it to
become enforceable. Principles of contract do not apply because there is an ethical obligation
on the giver‟s part to comply. Question: When can you enforce an undertaking? However,
where consideration is disclosed in an undertaking, the giver of the undertaking is discharged if
the consideration fails e.g. “upon receipt of the sum of x/= from the purchaser, I will release the
same to you.” You will be discharged if the P does not give you the money or if the P was to give
the financier some money i.e. the undertaking becomes more of a legal contract and the
principles of contract apply.
6) An undertaking is binding even if outside the giver‟s control. It demands of the giver to clarify
with the recipient as well as the client the nature of the undertaking you are about to give.
Consider whether you will be able to honour the undertaking when called upon to do so. It is no
defence that the undertaking cannot be met/honoured due to the death or insolvency of the
client on whose behalf you gave the undertaking. You must be able to control the outcome of
the undertaking. Always ensure you hold funds beforehand.
7) It is no defence that to honour the undertaking would be in breach of a duty owed to the client
i.e. an undertaking is personal and not subject to the whims of your client. This discourages
advocates from giving undertakings flippantly. You will also not be able to frustrate the recipient
of an undertaking who has relied on it by relying on change of events or circumstances to give
an undertaking for balance of the purchase price but this undertaking should only be issued and
be accepted where the purchase is being financed. You should not accept such an undertaking
where the purchase is not being financed. You need to establish this at the inception of the
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transaction and you may include it in the sale agreement.

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The purchaser’s advocate should ascertain that he has not only the balance of the purchase price but
also other disbursements like stamp duty and registration fees and any other disbursements before
giving an undertaking.

1) When you are acting for a redeemer bank (redeeming another bank‟s mortgage) you give them
an undertaking that upon registration of the discharge by the redeeming bank you will give
them the redemption funds. You can only give it after the discharge has been signed.
2) If you are acting for financial institution lending money to anyone i.e. upon registration of the
mortgage/charge you will release the loan. You must state that this undertaking is solely for the
benefit of the client you state the name of the client so that no one else can benefit from it.

Questions
1. Give four instances of undertakings.
2. On reforms, why do advocates deliberately fail to honour undertakings?

Should undertakings be limited to advocates with 7 years in practice since old advocates really respect
them but young advocates do not seem to respect them.

PRINCIPLES RELATING TO PROFESSIONAL UNDERTAKINGS

Thirteen principles, which are generally applicable to all undertakings, are set out below. It is
hoped that the principles as presented are clear and informative.

1) An undertaking is any unequivocal declaration of intention addressed to someone who

reasonably places reliance on it and made by a Advocate in the course of his practice, either
personally or by a member of the Advocate’s staff whereby the Advocate (or in the case a
member of his staff, his employer) becomes personally bound.
There is no obligation on an Advocate either to give or accept an undertaking, nor can
an Advocate be required to stand guarantor for a client by way of an undertaking.
The Society does not recommend the giving or accepting of oral undertakings. Oral
undertakings can lead to uncertainty as to the nature and extent of the undertaking.
Evidential problems may arise. When oral undertakings are given, the lack of formality
detracts from the gravity which should be attendant on the giving of any undertaking.
John Fox (a firm) –v- Banister (a firm) is good case law for the proposition that even in
written undertakings the intention may be more important than the wordings.
The Society recognizes that an oral undertaking given by one person to another may be
enforceable at law, but the Society will not render assistance to a party seeking to
enforce that undertaking as a matter of conduct. [ Reflection: What of undertakings
channeled through electronic mail ?]
Undertakings can be given even to lay persons. (See KCB Limited –vs- Adala 1983 KLR 467).
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2) Failure by an Advocate to honour the terms of a professional undertaking is a prima facie

evidence of professional misconduct. Consequently, the Society will require its
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The Society has no power to order payment of compensation or to procure the specified
performance of an undertaking if an Advocate declines to implement it. The Society will
proceed by way of disciplinary action for failure to honour the undertaking.
The Society will require an undertaking to be honoured by Advocates for so long as their
names remain on the roll and regardless of whether they hold current practicing
certificates or not.
The Society has no power to order the release of an Advocate from the terms of an
undertaking. This is a matter for the court, or the person entitled to the benefit of the
undertaking.

3) An undertaking will normally be required to be honoured only as between the giver and the
recipient.
The Society will normally require compliance with an undertaking only at the instance of
a recipient.
An Advocate cannot assign the burden of an undertaking (and thus claim to be released
from its terms) without the express approval of the recipient. ROA Otieno Vs AGN
Kamau & Co 134/03
The court will however not hesitate to enforce an undertaking on an application by the
recipients client. See: Naphtally Radier –vs- David Njogu t/a D. Njogu & Co. Advocates
HCCC No. 582 of 2003 (Nrb) , Kenya Commercial Bank Limited V Mohammed Muigai
Advocates HCCC No. 757 of 2003 where the court held that undertakings are not just
given at the behest of clients but the recipient’s client takes the benefit of the same and
can enforce the same.

4) An ambiguous undertaking is generally construed in favour of the recipient.

Wording of the undertaking is very important. It has to be clear.
In interpreting an undertaking the court will not invite extraneous evidence or terms
implied.

5) An undertaking does not have to constitute a legal contract to be enforceable in conduct.

No consideration is necessary for an undertaking to be enforceable in conduct.
6) An undertaking is still binding even if it is to do something outside the Advocate’s control.
Before giving an undertaking an Advocate must carefully consider whether it will be possible
to implement it.
It is no defence to a complaint of professional misconduct that the undertaking was to do
something outside the Advocate’s control.

7) An Advocate is responsible for honouring an undertaking given by a member of the

Advocate’s staff, whether admitted to the Roll of Advocates or not.
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Where an assistant gives an undertaking, the conduct of the assistant may also be called
into question by the Society.
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8) Where an Advocate in partnership gives an undertaking as an Advocate in the course of

practice, all partners are responsible for its performance.
A partner remains responsible for the firm’s undertakings even after that Advocate
leaves the firm or the partnership is dissolved.

9) An Advocate cannot avoid liability on an undertaking by pleading that to honour it would be a

breach of duty owed to the client or to self.
Since an Advocate will be personally bound to honour his undertakings, it is essential for
the Advocate’s protection that the client’s authority to do so is given before the
undertaking is furnished.
See the case of Kenya Reinsurance Corp. –vs- V. E. Muguku & Co. Advocates (1995-98)
1 EA 107.
See also Njagi J in D.K.Thuo & Co Advocates Vs Njagi Wanjeru & Co Advocates [eKLR
2010] as to “ no privity of undertakings” and the effect thereof.

10) An Advocate who gives an undertaking which is expressed to be dependent upon the
happening of a future event must notify the recipient immediately if it becomes clear that the
event will not occur.
Self explanatory.

11. In addition to the Society’s power to enforce undertakings as a matter of conduct, the court,
by virtue of its inherent jurisdiction over its own officers, has power of enforcement in respect
of undertakings.

Where undertakings are given by Advocates to court, the Society takes the view that
enforcement is a matter for the court; for this reason the Society will not normally
intervene.

12. An undertaking should not be given by an Advocate as an inducement to a client to secure

that client’s business.

Self explanatory.

13. The seeking by an Advocate of an undertaking from another Advocate which the first
Advocate knows, or ought to know, should not be given, may be deemed to be professional
misconduct.

Self explanatory.
Illegal undertakings intended for example to perpetrate a fraud should not be sought or
given.
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OBLIGATION CREATED BY A PROFESSIONAL UNDERTAKING

Depends on the type

1) If by lawyer to honour the lawyer must honour. After a lawyer accepts an undertaking, it is not
open to the lawyer to pick and choose which elements of the undertaking will be performed or
to improperly delay the performance of the undertaking.
2) If by client to honour, lawyer must take all steps to ensure that the client honours his
undertaking
3) Even in the case where the lawyer does not accept personal liability, it is the lawyer’s duty to
take all steps to ensure that the client honours the undertaking. Thus, even the most carefully
worded undertaking, designed by the advocate to avoid personal responsibility, does not
necessarily relieve the advocate of the obligation to take steps to see that it is fulfilled

CONSEQUENCES OF BREACH

1) Action for contempt if given in court proceedings

2) Disciplinary action see NP Radier vs DK Njogu & Co Advocates. Failure to honour an undertaking
is prima facie evidence of professional misconduct. See Rule 46 Digest
3) Action for damages.( If it constitutes a legal contract)
4) Reputational loss: destroys the honour of the profession see NP Radier vs DK Njogu& Co

ENFORCEMENT OF PROFESSIONAL UNDERTAKINGS

Once it is determined that an undertaking exists and the same has been breached the recipient
has the following options jointly and severally;
Co-operation with the undertaking party e.g. extending time
Demanding compliance in writing
Seeking enforceability through Court action –O 52 of CPR through an Originating Summons
Reporting the matter to LSK for disciplinary action
Undertakings can be enforced even if one is not the recipient-KCB V Mohammed Muigai Adv
(HCC757 of 2003)

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DRAFTING A PROFESSIONAL UNDER TAKING

11 April 2001

YYYY
Advocates
Dropping Zone Membership No. ,,,,,,
Nairobi

Attn: Ms. AAA

Dear Ms. AAA,

Re: L.R. No. 209/,,,,,,,, – MMMMM (K) Limited

We act for Paramount Universal Bank Limited. We understand you act

for FFFFF Bank Limited who have agreed to grant facilities to the above
named company. Enclosed is a self-explanatory letter from our client.

To enable us to forward to you the title and security documents relating to the
above-noted property please let us have your professional undertaking in the
following terms:

1. To hold the documents to our order returnable on demand and not to release the
documents to any Advocate or person whatsoever for any purpose without first obtaining
our written consent which will only be granted on such other Advocate giving a
Professional Undertaking in terms similar to the present one and on the understanding
that whether such Advocate complies with his/her Professional Undertaking or not we
shall continue to hold you liable on your undertaking as herein provided;

2. Not to utilise the documents for any purpose other than for registering a Discharge of
Charge and a Charge in favour of your Client in which case you will let us have a bankers
draft for K.Shs. 5,012,718.45 (outstanding as at 4th April 2001 ) together with interest
accruing on the same at the rate of 26.5% p.a for amounts up to K.Shs.5,000,000.00
and at the rate of 40% for all amounts there over until payment in full. Payment of the
principal and interest under this clause shall be made to us within seven (7) days of the
successful registration of the Discharge of Charge and the Charge or within thirty (30)
days from the date we forward to you the duly executed Discharge of Charge, whichever
is the earlier.
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3. To pay to us the sum of K.Shs.25,000.00 in respect of our charges (including VAT), such
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as aforesaid.

4. If a bankers draft for the said sum of K.Shs.5,012,718.45 together with interest as
aforesaid and our charges is not delivered to us within the time aforesaid, you will upon
demand immediately return the documents to us in the same good condition in which
they were delivered to yourselves.

5. You will not present or allow to be presented for registration the Discharge of Charge
without simultaneously presenting the Charge in favour of your Client, such joint
presentation being subject to the condition that if any of the said instruments is rejected
for registration then none of them shall be registered.

We look forward to your confirmation of your Professional Undertaking in the

terms aforesaid.

Yours sincerely,

SSSSSSSSSSSSSS

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25th March 2002

KKK & Company

Advocates
Chiromo Road, Westlands
(High Court Building, City Hall Way)
Nairobi

Attn: Mr. KKKK

Dear Mr. KKKKKi,

Re: Sale of Title No. Ngong/MMMMg/1000 ("Property")

DDDDDD to EEEEEEEEEEo

We refer to the telephone conversation between yourself and the writer this
morning.

We confirm that we act for Ms. EEEEEE, the duly constituted attorney of the
Vendor, who has instructed us to take over the conduct of this matter from Mr.
AAAA Advocate. We understand that you act for the purchaser, Ms.EEEEEE, and
Postal Corporation of Kenya, which is financing the purchase of the Property.

To enable us forward to you the original title, duly executed transfer and the

letter of consent (hereinafter collectively called the "Documents") in respect of

the Property, please let us have your professional undertaking in the following

terms:

1. That you will hold the Documents to our order returnable on demand and
you will not release the Documents to any Advocate or person whatsoever
for any purpose without first obtaining our written consent which will only
be granted on such other Advocate giving a Professional Undertaking in
terms similar to the present one and on the understanding that whether or
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not such Advocate complies with his Professional Undertaking, we shall

continue to hold you liable on your undertaking as herein provided;
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2. That you shall not utilise the Documents for any purpose other than for
registering a Transfer and Charge in favour of Ms. EEEEEE and Postal
Corporation of Kenya respectively, in which case you will let us have a
cheque for K.Shs.1,500,000.00 in respect of the purchase price for the
Property, such payment to be made to ourselves in exchange for the
Documents.

3. That if the cheque for the said sum of K.Shs.1,500,000.00 is dishonoured

for any reason whatsoever, you shall upon demand immediately return the
Documents to us in the same condition in which they were upon delivery to
yourselves.

We look forward to the confirmation of your Professional Undertaking in the

terms aforesaid.

In the meantime, we hereby undertake that (upon receipt) we shall hold the

purchase price (K.Shs.1,500,000.00) as stakeholder, and shall not release the

same to our client until we receive your confirmation that the Transfer and

Charge have been successfully registered in favour of Ms. EEEEE and Postal

Corporation of Kenya respectively.

We look forward to hearing from you shortly.

Yours sincerely,
SSSSSSSS & COMPANY

SSSSSSSSSSSSSSS
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COMPLETION
Following the investigation of title and approval/execution of the contract the parties now move
to the final stage of the transaction where interest actually passes.
Remember a Sale Agreement is simply an executory document and gives you no interest (see S.
54 of the ITPA).
You have to formally now transfer the interest and as we had seen during the lectures on
requirement for registration, no disposition is effective until a document passing the interest is
actually stamped and registered.
Prior to the registration however the Vendor also expects his consideration and it is this process
of “exchanging consideration” that is referred to as completion.
The Vendor completes by giving the Purchaser all the registrable documents plus possession
whilst the Purchaser completes by giving the Vendor the balance of the purchase price. It is the
final settlement of business.
Note however that title will only vest upon registration. It is however a bilateral and consensual
act and both parties have their respective duties to discharge.
Needless to add before proceeding to complete the Purchaser should re-assure himself that the
answers to requisition and the searches have not yet expired.
This can be done by re-affirming the requisition answers and or undertaking a pre-completion
search.

WHAT IS COMPLETION
After investigation of titles and execution of the sale agreement, the next and final stage is
the completion and transfer. The sale agreement is merely executory and it gives no
interest. It will only give you an interest when you are able to complete as the purchaser
(specific performance) and vendor (forfeiture).
To get the interest one needs to register a transfer after paying the requisite stamp duty.
The purchaser needs to also pass some consideration to the vendor. This process of
exchanging of some consideration is called COMPLETION. The vendor completes by handing
over possession while the purchaser completes by giving the balance of the consideration.
This is the final chain of conveyancing. It is however bilateral, concessional and concurrent.
The actual transfer of interest in the property in exchange for the consideration.
(a) Vendor completes by giving the purchaser all the registrable documents plus possession
(b) Purchaser completed by giving the vendor the balance of the purchase price.
Note that title will only best upon registration.
Key phrases on completion are:
1. Pre-Completion Searches
2. The date of completion
3. The venue of completion
4. The deliverables (completion documents) .
5. The obligations of either parties at completion
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1. PRE-COMPLETION SEARCHES
Buyer’s advocate should ensure that such pre-completion searches as are relevant to the
transaction are carried out, and that the results are satisfactory to the client.
The buyer’s lender also has an interest in the soundness of the title to the property and the
solvency of the borrower, so searches will also be done on the lender’s behalf.
The main reason for making the search is for the buyer’s advocate to confirm that information
obtained about the property before exchange remains correct.

2. DATE OF COMPLETION
The date may be agreed expressly by the parties and inserted in the contract.
When it is an open contract (one that only states parties, price and property) or the date is not
stated in the agreement the completion ought to take place within a reasonable period of time.
The Law Society of Kenya Conditions of Sale, Condition 2 however had gone further to provide
for a 42 day completion period where no date is provided.
If it’s a Controlled land then completion is 42 days after Vendor’s receipt of consent. If not
controlled then 42 days after date of contract.
The period before the date of completion is important to both parties as it is during this period
that they satisfy their contractual obligations or prepare to satisfy the same.
For the Purchaser assemble the monies, for the Vendor obtain the consents and clear the
encumbrances, for example.
As an Advocate it is thus your duty to ensure that you get a proper time frame estimated before
you agree to or insert a completion date. Otherwise you will always be held to your bargain and
the repercussions can be disastrous.
It must be noted that the completion date or period if there is any delay may be mutually
extended.

3. “TIME IS OF THE ESSENCE” CLAUSES

Where however the parties provide that the “time is of the essence” then the completion date
must be strictly adhered to.
Failure to complete in such a case will be deemed a fundamental breach of contract both at law
and in equity.
The party at fault will not enforce the contract specifically but the other party is free to pursue
his remedies for breach of contract including specific performance.
He may elect to rescind the contract the very next date if he chooses.
Ordinarily time is only regarded as of the essence if the parties make it so expressly as a term in
the contract.
Occasionally however the courts, at least in England have not hesitated to make time of the
essence by necessary implication.
See Barclay –vs- Messenger [1989] 3 All E.R. 492
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Barclay –vs- Messenger [1989] 3 All E.R. 492

A Contract provided that if the Purchaser should fail to pay the balance of the purchase price on a given
date, the agreement would become null and void. Sir George Jessel M. R. held that time was of the
essence stating obiter that he did “not know how making time of the essence could have been more
strongly expressed.”

See In the Kenyan case of Sagoo vs Dourado 1983 KLR 365

Sagoo vs Dourado 1983 KLR 365
The Court of Appeal however held that time will not be considered to be of the essence in any contract
unless
i. Parties expressly stipulate that conditions as to time must be strictly complied with
ii. Nature of the subject matter show that time should be of the essence
iii. A party subjected to unreasonable delay gives notice to the other making Time of the
essence.

It is a matter of construction of the contract and one may as well argue that S. 3(3) of Cap 23
would bar such interpretation which invites implications.
When time is not of the essence failure to complete on the agreed completion date does not
entitle the aggrieved party to decline to proceed with the contract. But what of unreasonable
delays despite requests to complete?
See Madan J.A in Njamunyu vs Nyaga 1983 KLR 282

Njamunyu vs Nyaga 1983 KLR 282
Where together with the other court of Appeal judges, the late Madan seemed to suggest that the
provision as to time being made of the essence can actually be implied.

This should really allow rescission. However it appears from the line of authorities that in the
absence of undue or unreasonable delay one would still be entitled to specific performance
even if he is the guilty party.

4. COMPLETION NOTICE
In such instances the aggrieved party needs to give a Completion Notice which must be
proper and explicit.
The Law Society of Kenya Conditions provide for this (Condition 4). Where the Notice is not
needed then one is entitled to rescind as the Notice itself now imposes the “time is of the
essence” condition.
When time is not of the essence completion is within a reasonable period of time (see
above).
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The party who is ready to complete give the other a completion notice once you give a
completion notice time becomes of the essence (Condition 4 (7) (b) ) and must be
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completed within 21 days (Condition 4 (7) (c))

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An effective notice must contain:
i. Limit for the time for performance (21 days);
ii. Demand performance of the breached terms and if possible state it;
iii. Be explicit that you will rescind the agreement on the expiry of the notice period, and
make no room for a time extension;
iv. Clear provision that you are in a position to perform your part of the bargain e.g. if you
are the purchaser it must be clear that you can raise the balance of the purchase price.
Note- Once time is of the essence it operates against you as well even though you served the notice.

A proper Completion Notice will constitute reason for the alleged breach and demand that it
be made good within the notice period and further that in default Agreement will be
rescinded forthwith upon expiry of the Notice.
To be effective too the Notice must limit a reasonable time for performance.
The Notice must also leave no room that the Server may still be willing to perform the
contract if there is still a failure to complete.
Of course to be effective the Server must himself be ready able and willing to complete in
which event the time is also of the essence for him. [Reflection: Will a notice given in
anticipation of breach be good?]

5. INTERIM PERIOD

The interim period as already stated between the execution of the contract and completion
is important for two reasons:
i. The performance of the various contractual obligations in preparation for
completion.
ii. The risk of the property.

i. Performance of Obligations
The Contract will have various obligations imposed on the parties.
We have witnessed that one of them is the payment of deposit which the Purchaser must
effect.
The Purchaser must also put together his finances, visit and inspect the property.
The Vendor on the other hand must obtain the requisite consents, discharge and
encumbrances (unless agreed it be discharged on completion).
Any other obligation under it must then be honoured.

ii. Risk of the Property

In a Court of Equity once there is a valid Contract of Sale, the Vendor becomes a trustee for
the Purchaser of the estate sold and the Vendor himself becomes owner of the purchase
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money.
This is so long as the Contract is not subject to a condition precedent e.g. the obtaining of a
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As a Vendor qua trustee, the Vendor has a personal and substantial interest in the property
which he has to protect and actively so.
His interest includes obtaining the purchase money which he can only do if he also delivers
the property “held in trust”.
He is thus under an obligation to ensure that the property’s condition does not deteriorate
nor is the same wasted.
The Purchaser’s interest is however only in the property and not any income being derived
there from.
As the Vendor is entitled to a lieu on the property as security of the purchase price, the
Vendor will always retain possession.
He must however honour his duty to maintain the same. He must treat property as a
prudent owner and not willfully damage it.
He has to use reasonable care to maintain it but he is not obliged to improve it.
The Purchaser is entitled to lay claim in damages if he completes the contract even though
the property has been wasted.
But if the property is completely wasted he is entitled to rescind and claim his deposit.
To avoid situations like the latter, the Vendor always takes insurance. It is different if risk
and possession is passed at date of contract.

6. COMPLETION VENUE

Usually at the vendor’s offices or his advocate’s office.

If the vendor has mortgaged property, completion could be at the Mortgagee’s or his
advocate’s office. This is where it is not provided in the contract.
At the venue at 2.30 (LSK CONDITION) BOTH parties must be ready to complete. Purchaser
delivers balance of purchase price and the vendor is expected to give vacant possession.

7. ACTUAL COMPLETION

The parties once ready to complete the Conveyance (the Vendor ready to execute the
Purchase Deed and deliver the other completion documents and the Purchaser ready with
the purchase money), completion can be effected.
As a general rule it takes place at the Vendor’s or the Vendor’s Advocates offices, but the
parties can agree otherwise.
Completion will take place on the date agreed at 2.00 p.m. (Law Society of Kenya
Conditions).
The Vendor will deliver the keys (possession) and the Purchase Deed duly and properly
executed and the other completion documents
8. COMPLETION DOCUMENTS
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The following are the major completion documents which will include:-
i. The Original Title documents;
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ii. Transfer duly signed by the vendor

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iii. Land Rent Clearance Certificate; (For leasehold Titles only)

iv. Land Rates Clearance Certificate; (For Municipal / urban properties of both a
leasehold and freehold nature provided a local government authority has levied land
rates on the property);
v. Relevant consents applicable to the Transfer. i.e
vi. Consent of the Commissioner of Lands to leasehold interests;
vii. Consent of the Land Control Boards for Agricultural land obtained in pursuance of
the Land Control Act Cap 302 of the Laws of Kenya;
viii. Consent of any chargee or Mortgagee having an interest in the land;
ix. Consent of any statutory authority having an interest in neighbouring property (e.g.
KPC, KAA, KCAA,) etc;
x. Notice of withdrawal of caveat or caution if there are any third parties having an
interest in the property;
xi. Original Land Rent payment Receipts;
xii. Original Land Rates payment Receipts;
xiii. PIN of the vendor;
xiv. 3 coloured photographs of the vendor or vendor’s directors
xv. Copy of the Vendor’s ID
xvi. Power of Attorney

9. DELIVERABLE
The Purchaser on the other hand will deliver the cheque for the balance of the purchase
price and apportioned outgoings as well as the authority to release the deposit..
[Reflection: What happens where the amount is or is in the excess of Kshs. 1,000,000/= ?]. At
times an undertaking replaces this cheque especially if the purchase is being financed.
The deliverable in this case is the key of the door to the property. Possession is de facto
control where you hand over to the purchaser i.e. the right to access the premises and
exercise full use and control over the premises
i. For purposes of conveyancing you need to ensure that the property is free from all
physical impediments (Your client should visit the place and confirm this)
ii. The property must be free from occupation
iii. The vendor’s advocate also gives assurance/ the conveyance/ the transfer duly
executed and registrable. Inspect the transfer to see that it is executed and attested
and refers to the property being sold. It should be in the correct form depending on
the registration regime i.e. RTA, RLA
Confirm any power of attorney, numbers, photos, signatures etc
The other deliverable is the requisite consent(s) e.g. LCB, Commissioners. Others are the Land
Rent & Rates Certificates, the original title deed and any other document in the contract.
NOTE – If you get a power of attorney from the vendor you will be able to deal with the
property pending registration of the Transfer.
Therefore include this power of attorney as a deliverable document in the sale agreement
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When you receive the deliverable, inspect them and confirm that they are valid documents
which you can use. If you do not do so, your client can sue you for negligence if the transaction
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does not proceed.

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PHYSICAL VS POSTAL DELIVERY

Once you confirm that the documents are registrable and can confer a valid title to the
purchaser you then deliver the balance of the purchase price or an acceptable undertaking
where the transaction is being financed by a financier.
In practice however, the transaction is completed by one party sending a deliverable on the
undertaking that the other will give delivery of his deliverables i.e. postal completion.
In postal completion, vendor’s lawyer becomes the purchaser’s advocates agent i.e. he has the
duty to inspect the completion documents and confirm that they are in order and registrable
and the cheque for the purchase price can now be given to the vendor (i.e. the cheque was in
vendor’s advocates possession)
LSK Condition 4 – When the purchase price is paid to the vendor’s advocate he should hold it as
a stakeholder for thirty days till registration of the transfer. On the 30th day he gives a notice to
the purchaser for him to register the transfer within 30 days.
After 30 days he gives a 7 day notice after which he releases the cheque to the vendor.
If the property is subject to mortgage finance, the transfer will be registered by the vendor’s
advocate. He also hands in the Mortgage deed to the vendor which will be used to effect
registration.
See Shaw v Foster [1872] 5 All ER 321 -On constructive trustee vis-à-vis purchaser and vendor
See also Rayner v Preston and Openda v Khan [1984] KLR 208

POST COMPLETION AND APPORTIONMENT

What need you do?
i. Report to and account to client.
ii. Stamp documents
iii. Register documents together
iv. Notify the world

What is apportionment? This is the payment of any portion of outgoings from the property.
Outgoings are any amounts paid like rents, rates by the vendor, and any tax applicable in
respect to the land.
When are outgoings apportioned? LSK Condition 7 If the property is sold with vacant
possession of the whole, the day completion takes place; or where the purchaser has taken
possession prior to that date, the date of possession; in any other case, the completion date.

REMEDIES AVAILABLE TO THE PARTIES IN THE EVENT OF BREACH

A) Remedies Available to the Vendor

If the vendor is the wronged party he can take an action for specific performance or he can seek
damages.
However if the vendor goes for specific performance he is precluded from forfeiting the deposit.
Specific performance is an equitable remedy and depends on the discretion of the court; it will
not be available to the vendor who has been guilty of unfairness or where it would cause
hardship to the purchaser.
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Hardship is extremely narrow and would include a case where the purchaser would have to
commit a breach of trust or duty if he agreed to complete or, if the purchaser would be liable to
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If the vendor decides against specific performance he may opt to any of the different remedies
(a) He can forfeit the deposit
(b) He can rescind the contract and claim the expenses he incurred.
(c) He may treat the contract as repudiated, resell the property and recover his expenses
and any loss of the resale but if he adopts this method, he must allow for the deposit
paid by the purchaser.
(d) Lastly he may treat the contract as repudiated and sue the purchaser for damages for
breach of contract. The extent of the damages will be the difference between the
contract price and the market price but again he must give credit for the deposit.

B) Remedies Available to the Buyer

If the purchaser is the wronged party, he may take out proceedings for specific performance.
He will also not obtain specific performance if he has been guilty of unfairness or if it would
cause hardship to the vendor.
In suing for specific performance the purchaser runs two risks
(a) The Court may order the purchaser to take the title being offered by the vendor if it is a
good holding title even if it is not the title contracted for
(b) If the purchaser’s action is dismissed, the Court cannot order his deposit to be refunded
except if the vendor cannot show title according to the contract or unless there was
fraud, on-disclosure or misrepresentation by the vendor.
In lieu of specific performance, the purchaser can rescind the contract and sue for the return of
his deposit or he can bring an action for damages for non-performance of the contract.
The damages will be the difference in value between the contract price and the market price. In
addition he will receive the refund on his deposit.
The damages may also be the return of his deposit plus interest at the courts rates and the
expenses of investigating the title.

LSK CONDITIONS FOR SALE

The L.S.K conditions of sale govern transactions relating to the sale of land. The conditions
contained within it are 30 in number, and can be included into the sale agreement, either by
reference being made to it or by explicitly incorporating the conditions in the Sale Agreement.
As far as a Sales Transaction is concerned the conditions can be categorized as:

i) Interpretation Conditions.
ii) Preliminary and Pre-contract Conditions
iii) Conditions that govern relations of parties in between
iv) Conditions upon Completion
v) Conditions after Completion
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(1) INTREPRETATION CONDITIONS

Condition No.2 of the Law Society, elaborates on what certain words used in the law conditions
mean.

POINT OF REFORMS IN THE INTREPRETATION

A glance of condition no.2, shows the inadequacy of meanings of words and phrases. This
condition is begging for reform and thus the following should be taken into account.

1. The phrasing of the words and meaning should have no legalese and should be written in clear
elaborate English. This will pave way for clarity.
2. It should define categorically what a “mortgage” is and a “charge” respectively. A charge secures
an interest over the land, whereas a mortgage transfers the interest in the land to the
mortgagee. However, not many purchasers securing a loan can differentiate the two.
3. The interpretation clause does not clearly define what a deposit is.As it is, it only states that a
deposit is ten percent (10%) of the purchase price, but it should also state that it is inclusive of
the purchase price.
4. The interpretation condition should state who constitutes a vendor and a purchaser in any sale
transaction. It should be as clear as possible, that is a vendor , is selling the land and any interest
in it for a consideration, whereas the purchaser is acquiring a the land and any other interest, as
a result of the consideration given.
5. “Chattels” are referred to in the interpretation section under the definition of deposits.
However, what are chattels are not defined. Within the interpretation section, chattels should
be defined to include machinery, stock, and produce from the same.However, the conditions
are silent on the matter.

(2) PRELIMINARY AND PRECONTRACT CONDITIONS

A pre-contract condition are those terms that are so fundamental to a contract, that failure of
disclosing them would automatically lead to the vitiating of the contract.
These conditions are:

a) Deposits- Condition No.3

This condition governs the payments of deposits in the sales transaction.
Deposits are to constitute 10% of the purchase price and can be paid either before or after the
signing to the sale agreement.
It can either be paid to the Vendor’s Advocate or an estate agent.
Payments are to be made either by way of banks cheque or in cash money.
Nonetheless, should the banks cheque bounce after the signing of the contract bounce, then the
vendor has a right at any time to rescind the contract.
Reforms still need to be under taken under this condition. It should state what should happen to
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any interest, that accrues from any deposit that is held in trust by a stakeholder, that is, whether
it constitutes part of the purchase price and whether it should be kept by the stakeholder as
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part of their fees or whether it should be refunded to the purchaser upon completion of the sale
agreement.

b) Identity and Condition- Condition No.14

This condition governs the identification of the property as well as the condition or state of the
property.
It is an important clause in that, as far as identity, the vendor has to show where the beacons
delineating the property are.
The absence of such beacons does not result in the contract being rescinded, but it would
require the vendor to hire a surveyor to properly place them at their cost, or the buyer can opt
to set them but will be indemnified by the vendor.
The paramount aspect of this condition is that on the condition of the property.
The purchaser has a right to inspect the property as far as it’s actual state and condition.
The purchaser then takes such property subject to it’s actual state and condition.
If any hidden defects are discovered after execution that could not be discovered (upon
reasonable inspection), then the purchaser has a right to rescind the contract.
The vendor is required to disclose any defect of the property at the time of sale, and upon
disclosure the purchaser will buy it subject to such disclosure.
Should the purchaser after execution of the sale agreement, discover undisclosed conditions,
they have a right to vitiate the agreement, since they had entered the agreement on the basis of
the earlier disclosed conditions of the property.

c) Easements, Liabilities – Condition No. 15

Under this condition the vendor is required, before the signing of agreement to disclose any
latent defect, easement, liabilities affecting the property and all present and contigent liabilities
with respect to road and sewerage charges.
Should the purchaser after execution of the agreement, discover undisclosed conditions, they
have a right to vitiate the agreement, since they had entered the agreement on the basis of the
earlier disclosed conditions and liabilities affecting the property.
It is therefore important during pre-contract inquiries to establish whether there are any
easements and liabilities, since they will not be present on the Survey Plan or title deed.

d) Local and Other Public Authorities Requirement- Condition No. 19.

The vendor should disclose to the purchaser of any local or public authority notification made to
them before execution of the agreement.
Nonetheless, should any notification been issued before the execution of the agreement any
cost to be inquired as a result of that notification will be borne by the vendor.
On the other hand, the purchaser will borne all costs and indemnify the vendor of any costs
incurred by them, had that notification been issued after the execution of the sale agreement.
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The most crucial aspect of this condition that makes it a pre-contract condition, is that, if the
vendor was at the time of execution of the agreement, aware that the property was subject to
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a compulsory acquisition order, or management order or demolition order and failed to

convey the same to the purchaser; the purchaser has a right to rescind the contract.
It is therefore, important to disclose the existence of such facts before the signing of the
contract.

e) Objections and Requisitions-Condition No.10

Goes hand in hand with the condition on “Abstract Title” whereby the purchaser is entitled to
make inquiries and objections relating to the title document, description of the property or as
far as the contract is concerned.
The Vendor must respond to any of this requisitions and objections within a reasonable time
(14) days otherwise he would have deemed them to be true.

f) Tenancies Condition No. 20

This is both a pre-contract condition and one that governs the relations of the parties.
It is a pre-contract condition in that the parties have to agree whether the property is subject to
any tenancy agreement.
In the absence of mentioning any such agreement or in the event of any inaccurate statement to
that effect, this condition will apply.

g) Insurance –Condition No. 23

This is an important clause and a pre-contract condition because, parties to the agreement
should agree as to whether the property should be insured from damage as at the time of
execution to the time of contractual completion.
This clause can also be known as the restitution clause.
In the absence of any such agreement, should the insured property be damaged before
completion the purchaser can be indemnified from the insurance cover by the vendor.
In absence of any insurance cover, the purchaser has a right to rescind the agreement, in the
event of any damage that may arise.
This clause is crucial where the sale transaction includes buildings, especially commercial or
industrial buildings, which are the corner stone of the sale transaction.

SPECIFIC REFORMS UNDER PRE-CONTRACT STAGE

Ideally, the Law Conditions are meant to be beacon, for drafting sale agreements. However, it
falls short of making any reference to imperative clauses that govern any sale transactions
(which should be included).
They are as follows:

1. Definition of fixtures and fittings. They need to be defined, as well as what constitutes a
fixture and fittings respectively, and the degrees of annexation. Furthermore, in the absence
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of a Sale Agreement, expressly stating what constitutes a fitting and fixtures, reference
should be made to the LSK conditions.
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2. Capacity. Who has capacity to enter any sale agreement, as far as different legal
personalities.

3. Possesion and vacant possesion. It should state what is possession and vacant possession.

4. “Searches”, should be defined in the LSK conditions, and furthermore, what constitutes a
personnel and official search. It is important, since it assists the aspiring purchaser to have
an appropriate avenue to investigate the title.

Condition 3 on ‘Deposits’ should state who is entitled to the interest accruing from a deposit,
held by the stakeholder.
It should state whether the vendor is entitled to it (either as part of the purchase price or
interest accruing as under condition No.8-interests) or should it lie with the purchaser (as
interest entitled to them under condition No.8- interests), or should it form part of the purchase
price

(3) COMPLETION CONDITIONS

a) Completion Condition No. 4

As much as this condition governs the relations of the parties at the time of completion, it also
acts as a pre-contract condition.
Sub-condition 1 to this condition highlights where completion is to take place- at the vendor’s
office, and what documents are expected by the vendor and requirements expected by the
purchaser.
These are documents that must be agreed upon by the parties before the transaction is
executed.
It also states the implication of the phrase, ‘time is of essence’ should it be included in a sale
agreement.

b) Tax and Other Liabilities- Condition No. 22

The vendor upon request by the purchaser should notify them of any information in their
possession relating to any tax relief, allowance or liability that will affect the purchaser’s liability
to tax.
This extends to include any money spent on the property by the vendor or his/her predecessor
in title, grant received by the vendor from the government, or any tax allowance made to or
balancing charge raised against the vendor or any previous ownership of the property.
This condition should be reformed as far as making it mandatory for the vendor to disclose this
information and NOT upon the request of the purchaser.

c) Legal Costs- Condition No. 30

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Before the commencement of any sale of property it must be agreed which party pays the legal
fees and to whom.
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According to this condition, each party will be responsible for paying the legal fees of their own
advocate.
However, the purchaser will be responsible for paying the legal fees relating to any preparation
and completion of a mortgage and all stamp duties registration fees and search fees.

d) Mode of Payments
Bank commissions, charges and any other conceivable deductions should not be made out of
the purchase price.
It should be treated independent from such ancillary expenses.

GENERAL REFORMS UNDER

The following are some of the general reforms:

1. Default clause. It should state what acts by parties to a transaction would amount to a
default.
2. Stamp Duty and related costs. – It should state what stamp duty is and who is to incur them:
the purchaser, generally.
3. Disclaimer- it should be defined what it is, and within what context its can be raised.
4. Guarantee of title- There should be an condition that explicitly makes it clear that the
vendor, guarantees to give the purchaser a good title free from any defects.
5. Estate Agent. The LSK conditions are silent on the position of an estate agent. The
interpretation clause should define who is an agent, and there should be condition that
governs the relations of an estate agent.
6. The conditions should have a condition on “shares” in a company that form the subject
matter of a sales transaction. It should set how they are registered and transferred; within
what timeframe, and the valuation of the shares. This is crucial especially where shares in a
company are a mode of conveying interest in land.
7. The LSK conditions should have a draft sale agreement, for commercial transactions and
another for residential transactions. Further, should state in a summary form the conditions
that should be (at the opt) of the parties to be included in them. This would assist in parties
identifying the appropriate terms that should be contained in a sale agreement. Hence,
reducing the time in drawing up a sale agreement.
8. There should be an encumbrance section that discourses on the available encumbrances,
that is, mortgages and charges. It should further highlight the stages involved in charging
and discharging a property, and the consequences that would happen in the event, during
that inter-period of charging a property a party (whether vendor or purchaser) defaults.
9. The aim of any legal or legislative instrument is to communicate to the appropriate reader.
The LSK conditions are lagging in this quality, and thus should be written in clear simple
English. All forms of legalese, should be removed in order to avoid scenarios of legalese:
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hence ambiguous interpretations.

10. There should be clause on Remedies. The clause should state (other than the remedy of
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rescission), the remedy of specific performance, injunctions and damages. Furthermore, it

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should spell out, in every condition, the appropriate remedy that would apply in the event
of a breach by one of the parties.This provides for certainty and reduces delay in any sale
transaction.
11. The most important reform on the LSK conditions is to rearrange the chronological structure
of all the conditions. Conditions should be arranged in a sequential manner, as well as being
clamped together where similar. After the Interpretation section, should follow all
preliminary and pre-contracts conditions, then conditions governing relations of parties,
conditions governing completion, conditions governing relations of parties after completion,
and schedule sale agreements for residential and commercial transactions.

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LECTURE 7: FRIDAY 3-10 JUNE 2016- MORNING SESSION (LECTURE HALL A)

TOPIC 7: VARIOUS ROLES OF THE PARTIES AND THEIR ADVOCATES IN

CONVEYANCING
There are many parties involved in a conveyancing transaction. (These include estate agents,
valuers, surveyors, architects. If the property is being used as security then a financier comes
into play.
However, only a few parties are involved the period between execution of a sale agreement and
its completion.
The main parties during that period are the vendor, the purchaser and their advocates.
However, depending on the nature of the property and whether the property will be used as
security, surveyors, architects and financiers may also be involved.
Some of the obligations of the vendor and the purchaser are set out in section 55 of the Transfer
of Property Act and the Law Society Conditions of Sale 1989 Edition.

A. Obligations of the Vendor

1. He is under a duty to disclose any material defects in the property which he is aware of and the
buyer cannot discover with ordinary care. Condition 15 (1) of the Law Society Conditions of Sale
provides that the vendor must disclose to the purchaser the existence of all rights , privileges,
latent easements which are known to him to affect the property. It is important to note that the
seller is not under a duty to disclose patent defects as this the buyer must exercise due
diligence. This is done through the various processes of investigating title such as searches, pre-
contract enquiries, physical inspection of the property and requisitions.

2. He must also produce to the buyer the title documents for purposes of examination. A scrutiny
of the title documents may inform the decision as to whether to do requisitions.

3. He must also answer to the best of his information all questions put to him by the buyer in
respect to the property or the title.

4. He is under a duty to execute a proper conveyance of the property in exchange for the payment
due on the purchase price.

5. Vendor is under a duty to take care of the property between the date of execution of the
contract of sale and all documents of title. This would include management of the property,
ensuring that reasonable repairs are undertaken on the property and ensuring that there are no
squatters or trespassers on the property. In Dharmashi v Abdulrahman (1950) 24 KLR 24. It was
held that the vendor must ensure the property must not physically deteriorate and must
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manage the property as appropriate. The vendor becomes the trust.

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6. He is also under a duty to pay all outgoings such as rates and rent, obtain clearances The
requirement of a Rates Clearance Certificate is stated in section 21 of the Rating Act, section 86
of the RLA and 33 (2) of the RTA. Rent is payable where the property is leasehold. The
requirement for a Rent Clearance Certificate is stated in section 86 (A) of the RLA and section 33
(3) of the RTA for the same and discharge all encumbrances registered against the property.
Condition 16 (2) of the Law Society Conditions of Sale provides that the vendor is responsible for
obtaining the discharge of any encumbrance to which the property is not sold subject. This
applies where the vendor had charged the property in favour of a financier.

7. Obtaining the relevant consent to transfer. This could be Commissioner’s consent where the
property is leasehold and owned by the government. It could be lessor’s consent where the
property is leasehold and is owned by a freehold owner. Consent of the chargee or mortgagee
where the property is used as security. Other consents include Presidential consent which
applies to property along the Kenyan Coast, consent of the Kenya Railways Corporation and
Kenya Airports Authority. Condition 16 (1) of the Law Society Conditions of Sale provides that
the vendor is responsible for obtaining all consents and the purchaser shall, where necessary,
join in making any application. For clarity purposes, the vendor is only responsible for obtaining
consents to transfer. If the property will be used as security, consent to charge is obtained by
the purchaser.

8. The vendor is also under a duty to engage a surveyor where the property is being sub-divided.
Condition 17 of the Law Society Conditions of Sale provides that where the sale requires
subdivision, the vendor shall apply for approval of the subdivision, cause a survey to be carried
out and Deed Plans issued to the Director of Surveys and where the property is registered under
RLA cause subdivision forms to be prepared and aseparate register for the property opened.

9. There is also an implied term that the vendor should give the purchaser a quiet possession.

B. Obligations of the purchaser

1. To disclose to the seller any fact as to the nature or extent of the seller's interest in the property
of which the buyer is aware but of which he has reason to believe that the seller is not aware,
and which materially increases the value of such interest.

2. To pay the balance of the purchase price upon completion as agreed. If the purchaser is being
financed, the he should deliver to the vendor or his advocates an appropriate professional
undertaking from the financiers advocate to pay the balance of the purchase price upon receipt
of the registered transfer in favour of the purchaser and charge or mortgage in favour of the
financier.
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3. Where the ownership of the property has passed to the buyer, to bear any loss arising from the
destruction, injury or decrease in value of the property not caused by the seller; This may arise
where possession has already been granted before completion.

4. Where the ownership of the property has passed to the buyer, to pay all public charges and rent
which may become payable in respect of the property, the principal moneys due on any
encumbrances subject to which the property is sold, and the interest thereon afterwards
accruing due. Condition 6 (2) (c) of the Law Society Conditions of Sale provides that from the
time of taking possession until either completion or until the vendor retakes possession, the
purchaser shall pay all rates, rents, taxes, costs of insurance and other outgoings in respect of
the property

5. The buyer is also under a duty to pay stamp duty on the transfer as he is the person acquiring
the interest.

C. ROLE AND OBLIGATION OF VENDOR’S (SELLER’S) ADVOCATE IN LAND SALE

The first obligation of the seller’s advocate is to take instructions from Seller including details of
proposed purchase, authorization to disclose details in chain transaction and replies to pre-
contract inquiries.
The issue of conflict of interest should be examined at this stage.
Discussion of fees, disbursements, taxation matters and confirmation of instructions are all
obligations the seller’s advocate should partake at this stage.
The next obligation is the drafting of initial letters to the various parties involved including
client, buyer’s advocate and any other party involved eg. agents.
The next obligation involves obtaining title deeds from Seller and other documents necessary
for purposes of sale which are available immediately.
The sellers advocate should then reconfirm with Seller’s answers to pre-contract inquiries and
thereafter draft the Contract.
He is then required to dispatch the contract to Buyer’s Lawyer (together with copy or abstract of
the Title, reply to pre-contract inquiries, copies of relevant planning consents, covenants,
easements, licenses etc.).
Upon receipt from buyer of the sale agreement, the seller’s advocate is then required to engross
the same.
However, in instances where amendments are proposed then the advocate is under obligation
to consult with his client before engrossing the same.
The next stage involves returning the contract to buyer for execution or signature.
Upon payment of any deposit, the seller’s advocate is obligated to receive and deposit the same
in the client account and confirm (in the event that the deposit was paid via a cheque) that the
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same was honored and ask client (seller) to execute the contract.
The seller’s advocate is then under obligation to advise his client on the continuing duty of care
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The seller’s advocate is then required to peruse and draft the conveyance and return the
approved conveyance to the buyer. The advocate then prepares for redemption of any
mortgage.
The advocate should afterwards prepare a completion statement, arrange for the execution of
the conveyance, set up and host completion meetings.
When the sale is concluded, the seller’s advocate is obligated to account to the client for
proceeds of the sale.
The net sum is then paid to the seller

STEPS TAKEN BY THE VENDOR’S ADVOCATE

1. Take instructions from Seller.

Take Sellers instructions including details of proposed, of related purchase,
authorization to disclose details in chain transaction, replies to pre contract inquiries
etc.
Check conflict of interest issue.
Discuss fees, disbursements, taxation matters and confirm instructions..
Check and confirm that proceeds will clear any encumbrances.

2. Draft initial letters

To agents, to client, to Buyers Advocate etc.

3. Obtain Title Documents from Seller and other documents necessary for purposes of sale which
are available immediately. If property is leasehold address following issues:
is consent required? From who?
What are the outstanding outgoings?
Will the freehold or leasehold be deduced?

4. Draft and reconfirm with Seller answers to pre contract inquiries.

5. Draft the Contract and dispatch to Buyer’s Lawyer with copy to Seller for approval. Send also to
Buyer’s Advocate
Copy or abstract of the Title
Reply to pre-contract inquiries
Copies of relevant planning consents, covenants, easements, licences, insurance
certificates etc.

6. Engross the Contract (Sale Agreement) on receipt from Buyer. If amendments proposed then
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consult with Seller before engrossing.

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8. Receive and deposit in the client account any deposit payable.

9. Confirm deposit cheque has been honoured and ask Seller to execute Contract.

10. Return counterpart copy of the Contract to Buyer’s Advocate.

11. Advise Seller that he had a continuing duty of care towards the property and should take
reasonable care to ensure that the property remains in the state in which it was at the date of
the Contract.

12. Reply to any requisitions on title. Attend to specific queries or objections raised by Buyer.

13. Peruse and approve the Draft Conveyance and return the approved or revised Conveyance.

14. Prepare for the redemption of any Mortgage(s).Contact Mortgagee and send Discharge with
undertaking.

15. Prepare a Completion Statement.

Purchase price less deposit paid add apportionments (and interest?).

16. Arrange for execution of the Conveyance.

17. Arrange for and host completion meeting.

18. Report completion to Seller and Estate Agent and authorize release of keys to Buyer.

19. Redeem Mortgage(s)

Comply with and satisfy undertakings and obtain release from undertakings.

20. Account to client for proceeds of sale.

Full purchase price less Mortgage redemption Less commissions to Estate Agent Add
apportionment (and interest?) Less Advocates fees. Pay net to Seller.
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SALE AND PURCHASE OF LAND

CHECKLIST – ACTING FOR VENDOR

Tick or Cross where appropriate
OBTAINED PENDING COMMENT
Obtain title deeds
Investigate the title
Is vacant possession going to be granted on completion
Are there any tenancies?
Has Purchaser paid deposit?
Prepare Agreement for Sale
Is Land Control consent required?
Is Commissioner of Lands consent required?
Is any other form of Consent required?
Does notice to vacate to occupants of property need to be
served?
Has Rates Clearance Certificate been obtained?
Has Stamp Duty Valuation Form been prepared?
Has draft Transfer been received?
Has Transfer been received?
Undertaking required?
Has registration been completed?
Received counterpart copy of duly registered transfer?
Has the completion statement and fee note been prepared?

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D. ROLE AND OBLIGATION OF PURCHASER’S (BUYER’S) ADVOCATE IN LAND SALE

The taking of instruction by from Buyer is the first obligation of the buyer’s advocate.
The advocate should be careful to consider the issue of conflict of interest during this stage.
Upon discussion and agreement of fees, the advocate should receive and deposit the deposit in
the client account.
The advocate is then obligated to advise the buyer on taxation matters (VAT, stamp duty, capital
tax gains etc.)
The advocate should also undertake a survey and physical inspection of the property on behalf
of the buyer.
The buyer’s advocate should additionally make pre-contract searches and enquiries and raise (if
any) pre-contract enquiries with the seller.
The seller’s advocate is obligated to investigate title and raise requisitions on behalf of the buyer
and consult with the buyer on the results of the same and on the replies to pre-contract
enquiries and requisition.
Upon receiving the contract or sale agreement from the seller’s advocate, he is required to
amend the draft Contract as necessary and return it to Seller.
The advocate should then make preparations for the Mortgage facility if Lender is separately
represented and advise Buyer on terms of Mortgage.
The advocate is then required to engross or receive engrossment of contract from the seller’s
advocate and there after return the engrossed and executed contract together with deposit
cheque to seller’s advocate and afterwards receive counterpart contract signed by the seller.
He should then draft Conveyance and send for approval and upon its return engross the same,
make pre-completion searches and arrange for execution of the mortgage and conveyance by
the buyer.
He is then required to receive all monies (disbursements, fees, balance of purchase price and
apportionments), attend completion meetings and report to client on the same.
He should then stamp the conveyance and lodge the conveyance for registration.
He should thereafter make post-completion searches if he deems the same necessary and
finally account to client and release title documents to the buyer.

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STEPS TAKEN BY THE PURCHASER’S ADVOCATE

1. Take instructions from Buyer.

2. Consider conflict of interest.

3. Discuss and agree on fees.

4. Receive and deposit the Deposit in the client account.

5. Liaise with Buyer as to his financial arrangements and send a letter to Buyer on desirability of
having a survey and/or physical inspection of property and determine appropriate completion
period.

6. Advise Buyer on taxation matters i.e. rent, rates, V.A.T and stamp duty implication on the
transactions.

7. Consider Surveyors or Valuer’s Report.

8. Deal with planning matters.

9. Make pre-contract searches and enquiries.

10. Consider the draft Contract and raise pre contract enquiries of the Seller.

11. Investigate Title and raise requisitions.

12. Consider Seller’s replies to pre contract enquiries and requisition. Consult on same with Buyer.

13. Amend draft Contract as necessary and return to Seller.

14. Make preparations for the Mortgage Facility if Lender is separately represented and advise
Buyer on terms of Mortgage.

15. Engross or receive engrossment of Contract.

16. Arrange for execution of Contract.

17. Return engrossed and executed Contract together with deposit cheque to the Seller’s Advocate.
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18. Receive counterpart Contract signed by Seller.

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19. Draft Conveyance and send for approval and upon its return engross same.

20. Make pre completion searches.

21. Make further preparations for grant of Mortgage and ensure this is in place.

22. Arrange for execution by Buyer of

Mortgage
Conveyance and attestation of both.
23. Receive all monies (disbursements, fees, balance of purchase price and apportionments).

24. Attend completion and report to client.

25. Stamp Conveyance & Mortgage. Get Conveyance endorsed with assessed value.

26. Give notice to tenants.

27. Simultaneously with 26, lodge Conveyance for Registration.

28. Make post completion searches.

29. Account to client and release title documents to client.

30. Dispose of any other documents as instructed.

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SALE AND PURCHASE OF LAND

CHECKLIST – ACTING FOR PURCHASER

(i) Full name(s) and address(es) of

Purchaser(s)…..………………………………………………………………………………………………………………………………
(ii) PIN No(s) ……………………………………………………………………………………………………………………………………..
(iii) Telephone No(s)………………………………………………………………………………………………………………………….
(iv) Is time to be of the essence? ……………………………………………………………………………………………………
(v) Does Purchaser want Vendor to point out beacons? ……………………………………………………………….
(vi) Does property have access? …………………………………………………………………………………………………….
(vii)Are there any shares in a water or management
company to be transferred? ……………………………………………………………………………….......................

Tick or Cross where appropriate

OBTAINED PENDING COMMENT

Obtain copy of title docs

Search the title

Is Land Control consent required? (To be obtained

by vendor)
Is Commissioner of lands consent required? (vendor
to obtain)
Is any other form of consent required? (vendor to
obtain)
Does client have deposit?

Is vacant possession going to be granted on

completion? If earlier, on what conditions?
Are there any tenancies?

Is the Transfer document prepared?

Joint tenants or tenants in common?

Have we collected Stamp Duty and fees from client?

Have all completion documents been received?

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Rates Certificate?
Has stamp duty been paid?
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Has a valuation been carried out by Government

Valuer?
Has document been endorsed by the Collector?

Are there any new encumbrances On title? (Do a

further search)
Is registration complete?

Has client’s title been entered on the register?(Do a

further search)
Has the completion statement and fee note been
prepared?

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COMPARING THE CONVENTIONAL AGREEMENT FOR SALE AND ONE THAT CATERS FOR OTHER
SCENARIOS

1. Purchase of New Houses, Flats and Apartments

Entails a sale agreement for land just like any other sale agreement for land.
However the terms of sale will be crucial such as ownership of shares in a management
company which manages the day to day affairs of the estate, attends to the affairs of the
owners.
The reversionary interest of the property will be transferred to the management company
upon registration of all the leases of the flats/apartments. This is to ensure perpetuity of the
lease.
Interests to look at are the shareholders of the management company; right of Management
Company to obtain the reversionary interest, provision for the formation of the
Management Company and ownership of the management company.
A developer will develop the flats using the buyer/tenant’s money therefore one has to look
at the contractual terms in relation to construction, completion date, whether it is feasible,
whether other construction work needs to be done or whether it is logistical.
Occupational certificates from the local authorities are crucial.
They certify that the development is proper within the jurisdiction of the local authority and
are in accordance with the plans that were presented to them.
Rectification of defects (defects liability period between 30 – 60 days) where the developer
will repair any defects noticed within that period at no cost to the tenant. In this clause, the
client will retain a certain sum to cover for the defects liability period.
How is the level of progression audited especially where the developer is using your client’s
money to develop the flats? The sale agreement needs to provide for this auditing through
qualified personnel such as quantity surveyors who will not necessarily be the developer’s
employees i.e. independent personnel.
One also needs to check how much your client will pay upon the transfer of the reversionary
interest. That figure should be known before the signing of the agreement because if left out
it can be hefty. It is usually between 10,000 and 50,000.
The sale agreement also provides for some extra charges. However, there is no rule that
states that the buyer should pay the vendor’s advocates fees.
If your client is going to pay, then it should be established early in advance. (However,
nowadays when it comes to buying of apartments there might be such a requirement in
respect of the fact that the vendor’s advocates will also handle the formation of the
management company and fee in respect of the same to the purchaser.)
Other charges are electricity deposit, water deposit etc (these amounts need to be the
statutory amount), six months service charge (security, caretakers fees, maintenance of car
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park, swimming pool, playground and gym etc) The service charge ought to be audited by
the management committee.
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The sale agreement should provide for the amount to be paid by your client for his share in
the management company.
This should not exceed Kshs.10,000. In relation to new houses, Management Company does
not apply however occupational certificates will apply.

For houses, flats and apartments

1. Letter of offer(prepared by vendor’s lawyer)
2. Usually an agreement for lease, Lease and maybe share purchase agreement.
– Management Company, where purchaser is a shareholder
– Reversionary interest to revert to the company
– Interest sold is usually leasehold
– Company applies for extension of head lease when the same expires
– Ensure compliance with completion date
– Defects liability- period is 6 months after completion, repair of any damage is at
vendors/developer’s cost
– Certificate of occupation- issued by local authority confirming compliance with approval
and that property is fit for habitation. Completion date usually pegged to certificate of
occupation e.g. completion date means 30 days after issuance of certificate of
occupation
3. Share transfer from should be executed
4. Ensure there is a warranty and indemnities clause to rely on.
5. Purchaser (Duties)
– Investigation of title
– Site plan for identification of subdivisions, differs with the registry map(RLA) where the
legal subdivisions are marked
– Obtain planning permission and ensure building complies
– Follow on the issuance of certificate of occupation

2. Purchasing through an Auction

They could be private or public. In private auction, only a limited group of people are invited
to buy the property.
The bid given does not amount to a contract until it is accepted by the knocking down of the
hammer. S.3 of the Law of Contract Act does not apply.
The issue of bona fides applies i.e. seller under an obligation to fetch the highest price
possible.
Ss. 12 & 11 of the Restrictive Trade Practices & Monopolies Act prohibits bid rigging. Sale is
of land is usually by private treaty or public auction usually to the highest bidder at the fall of
the hammer.
This can be done in two ways:
(a) Execution of a court order
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(b) Pursuant to a statutory power of sale.

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Look at Auctioneers Act 1996 and rules there under, Civil Procedure Act (execution of
decrees), (sale by chargee).
Requirement of Cap 23, (Law of Contract Act) section 3(3) relating to execution of contracts
for the sale of land does not apply since the contract is formed at the fall of the hammer.
The bid is merely an offer. It can be withdrawn or rescinded at any time and until
acceptance, the bid is susceptible to challenge, especially where the bidder doesn‘t meet the
reserve price.
Reserve price is the value of the property as at the time of the auction.
In auction sales the seller is under duty to act in utmost good faith. If he sells the property at
a value other than the mortgage debt, he must account to the mortgagor. The auctioneer is
at liberty to reject a bid that doesn‘t meet the reserve price.
If no bid meets the reserve price the auction will be withdrawn.
The terms of the auction sale are in most cases pre-set. The auctioneers have already set the
amount that they want to raise. There are no negotiations.
If property is being sold pursuant to a court decree, the court will set the terms e.g.
provision of the reserve terms.
Who may bid at the auction?
(a) Chargee and their agents
(b) Owner of the property
(c) Any person desirous of owning the property.

DUTIES OF ADVOCATE FOR PROSPECTIVE PURCHASER IN AUCTION SALE

1. Search: because of caveat emptor doctrine. Most auctioneers are quite secretive; an
advocate must therefore raise the relevant requisitions and inquisitions discovered from the
search.
2. Conduct enquiries whether there are any pending matters in court.
3. Engage surveyor – to advise you on a property (advice client on need for this).
4. Advise client that he is supposed to pay 30 to 40 percent at the fall of the hammer.
5. Advise client to be ready with the balance to be paid within 60 to 90 days. This is important
because of risk of forfeiture of deposit which is higher than the usual 10%
6. Engage valuer- to advice on proper/real value of property.

DUTIES OF ADVOCATE FOR SELLER IN AUCTION SALE

1. Act in good faith; ensure property fetches the best price.
2. Ensure proper procedures are followed once bid is accepted.
3. After receiving 30-40% ensure that the appropriate documents are put in order.
4. Transfer may be by way of vesting order which is registered against title and then the title is
transferred upon payment. Where auction sale is by virtue of executing decree, transfer may
also be by way of transfer by mortgagee or chargee.
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Considerations to note: See Auctioneers Act

Auctioneers must be licensed by the Auctioneers board to conduct an auction sale.
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ii. The place, date and time of auction must be advertised in the local newspaper.
iii. The sale must take place as advertised unless cancelled by notice.
iv. The presence of a reserve price, if any, must be indicated in the advert.
5. If there‘s no reserve price, the seller should not bid and the auctioneer knowing this fact
should not allow such a bid. The property must be sold to the bonafide bidder at the price
reserved by him.
6. The three landmark stages of a conveyancing transaction are:
i. Making of the Contract
ii. Completion
iii. Registration

PROS AND CONS OF AUCTIONS

1. Bad root of title can be disposed of
2. Involves many interested parties- since sale is publicized
3. Costs- auctioneers, advertising etc
4. Purchaser has little time to consider terms in contract for sale and impose his conditions
5. Price may not reflect the market value
6. Prone to challenges by chargor/mortgagor

3. PURCHASE BY WAY OF SHARES IN A CO-OPERATIVE MOVEMENT

An acquisition agreement for the shares is required and a share certificate is issued entitling
one to own a property.
Share transfer form should be executed
Search- a thorough investigation of the movement‘s affairs is required, including its actual
and contingent liabilities

4. PURCHASE OF A COMMERCIAL PROPERTY FOR DEVELOPMENT

Change of user acquisition should be a condition in the agreement

Scrutinize local development plans and ensure that your client‘s development plan has been
approved
If purchasing commercial premises look out for protected tenants, get vacant possession if
possible.

5. PURCHASE OF TENANT OFFICE BLOCK

Pre-contract investigations to include consideration of the existing covenants and conditions

in lease
Ensure assignment has been consented to by the lessor. Make this a condition of sale
contract.

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If change of user is required, obtain consent from lessor

Was planning permission obtained?
If acting for vendor ensure there is a guarantee that the tenant will comply with the
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LECTURE 8: FRIDAY 17 JUNE-1 JULY 2016- MORNING SESSION (LECTURE HALL

A)

TOPIC 8: TRANSFER STAGE

Definition

Section 2 of the Land Registration Act No.3 of 2012 and Section 2 of the Land Act No.6 of 2012
both define a transfer as "the passing of land, a lease or a charge from one party to another by
an act of the parties and not by operation of law and includes the instrument by which the
passing is effected".

Section 2-Land Act and Land Registration Act

"transfer" means—
a) the passing of land, a lease or a charge from one party to another by an act of the parties and
not by operation of the law; or
b) the instrument by which any such passing is effected;

They are what gives the purchaser the right and interest conveyed/purchased.
The sale agreement of itself does not convey an interest in land.
See Openda v Khan

Openda v Khan
Sale agreement creates no interest over the property.

The transfer is always drawn by the purchaser’s advocate save in very exceptional
circumstances e.g. in mortgages and subleases. See Salim v Okongo [1976] KLR 42
See also Condition 24 of the LSK Condition of Sale 1989- Transfer can be drawn by the
purchaser’s advocate. The drafting responsibility is then in a way passed to the vendor’s
advocate when his approval is so sought.
Purchaser’s advocate ensures the purchaser really obtains the interest in land sold.

24. Conveyance

1. The conveyance shall be prepared by the Purchaser and delivered to the Vendor for perusal
and approval not less than Fourteen (14) days before completion.

2. The engrossment of the conveyance for execution shall be delivered to the Vendor within Seven
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(7) days of its agreement.

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requisition.

4. Where the sale is to be carried out by a lease or an underlease, the Vendor may furnish a form
of lease or underlease from which the draft can be prepared and may charge a reasonable fee
not exceeding Shs 500.

5. On payment of the purchase money, the Vendor will execute a proper conveyance of the
property to the Purchaser and will deliver to the Purchaser a rates clearance certificate and,
where applicable, a land rent certificate in respect of the property valid for a period expiring not
earlier than the completion date.

6. Where so requests, the Purchaser shall execute the conveyance in duplicate. The duplicate shall
be stamped together with the original and shall be delivered to the vendor after registration.

CONVEYANCE/ASSIGNMENTS/TRANSMISSION

Both the Land Registration Act and Land Act don’t have the meaning of conveyance and
assignment although they both have the definition of the word assignee as means a person to
whom an assignment is made;
Under the old land regime A conveyance refers to a document used to transfer an interest
registered under GLA or LTA which interest is a freehold and An assignment refers to a
document used for purposes of transferring an interest registered under the GLA or LTA
which is a leasehold interest.
Deed by which the owner of a freehold/leasehold property whose title is subject to the
deeds registry transfers ownership.
Transmission -S2 LA-the passing of land, lease or charge from one person to another by
operation of law on death or insolvency or otherwise.

TRANSFER CONVEYANCE
An instrument or statutory form which The deed by which the owner of a freehold
transfers the ownership of a freehold or property whose title is subject to the deeds
a leasehold property (title) from one registry transfers ownership.
person to another. If interest is a leasehold, the deed is called a
S2 of Land Act- the passing of land, a deed of assignment. If freehold, it is called a
lease or a charge from one party to deed of conveyance. Mainly under GLA and
another by an act of the parties and not LTA.
by operation of law and includes the Deed is a document that is signed sealed
instrument by which such passing is and delivered, as well as there must be an
effected. intention to be bound.
Transfer of registered land under RTA
and RLA(before their being repealed)
only purported to effect the transfer as
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the actual transfer occurred on

registration.
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TYPES OF TRANSFERS

There are two types of transfers namely

a) Voluntary Transfers

Also known as Inter-Vivos

This is done through
i. Sale
ii. Settlement or
iii. Gift

b) Involuntary Transfers

This is also known as transfer by Operation of the Law.

This can be either through
i. Death
ii. Court Attachment or Sale
iii. Vesting Order
iv. Bankruptcy or Insolvency
v. Adverse Possession
vi. Compulsory Acquisition

VOLUNTARY TRANSFERS

Section 2 of the Land Registration Act defines a transfer as the passing of land, a lease or a
charge from one party to another by an act of the parties and not by operation of the law; or
The law further allows one to transfer his or her interest in land with or without consideration.
See Section 37 of the Land Registration Act

37. Transfers
1. A proprietor may transfer land, a lease or a charge to any person with or without consideration,
by an instrument in the prescribed form or in such other form as the Registrar may in any
particular case approve.
2. A transfer shall be completed by—
a) Filing the instrument; and
b) Registration of the transferee as proprietor of the land, lease or charge.

Transfer By Way of Sale or Gift

In general this transfer can be by way of a sale or a gift of an interest in land.

When it is a sale a consideration is given in most cases it is money, when it is conveyed by
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way of gift, it is stated to be made in "consideration of love and affection".

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Transfer is only effected by the estate owner- e.g. the legal owner, beneficial owner,
personal representatives, trustee, chargee/mortgagee.

REQUIREMENTS FOR REGISTRATION

When transferring an interest in land the following documentation are required (See Section 44
(5) of the LRA 2012)
i. a copy of an identity card or passport; and
ii. a copy of a Personal Identification Number certificate;
iii. passport-size photographs;
iv. where applicable, a marriage certificate; or
v. such other identification documents as the Cabinet Secretary may prescribe.
This is in line with the general execution of all forms of conveyancing documents that are
supposed to be in writing, a transfer being one of them
Not to mention the requirement of paying stamp duty as earlier discussed

44. Executions of instruments in writing.

1. Except as otherwise provided in this Act, every instrument effecting any disposition under this Act
shall be executed by each of the parties consenting to it, in accordance with the provisions of this
section.
2. The execution of any instrument referred to in subsection (1), by a person shall consist of
appending a person’s signature on it or affixing the thumbprint or other mark as evidence of
personal acceptance of that instrument.
3. The execution of any instrument referred to in subsection (1) by a corporate body, association,
cooperative society or any other organization shall be effected in the presence of either an
advocate of the High Court of Kenya, a magistrate, a Judge or a notary public.
4. An instrument executed out of Kenya shall not be registered unless it has endorsed o n i t or
attached to it a certificate in the prescribed form completed—
a) if the instrument was executed in the Commonwealth, by a judge, magistrate, notary
public, commissioner for oaths ; or
b) if the instrument was executed in a foreign country outside the Commonwealth, by any
other person or class of persons as the Cabinet Secretary may prescribe.
5. The transferee shall in addition to executing the instrument, attach the following-
a) a copy of an identity card or passport; and
b) a copy of a Personal Identification Number certificate;
c) passport-size photographs;
d) where applicable, a marriage certificate; or
e) such other identification documents as the Cabinet Secretary may prescribe.
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TRANSFER FORMS

I. Under the Old Land Regime (RLA,RTA AND GLA)

This depends on:
a) statute applicable
b) interest to be transferred
Use of statutory forms prescribed by RLA and RTA or instruments in conformity with
the Acts and approved by the Commissioner of Lands.

RLA TRANSFER
S.38(1) RLA- dealings in land subject to the Act must be in accordance with the Act.
For RLA land, forms are prescribed which are mandatory under Section.108 and Schedule 3
of the Act. You must use these forms unless you prepare your own form, pay the requisite
fee and obtain consent from Registrar.
S108- use of prescribed form issued by the Registrar. Requirement of verification of
execution under S109 was mandatory. No requirement of a seal.
Schedule 3 of RLA- If an Advocate chose to use a form other than those prescribed, he must
have them approved by the Commissioner
NB: a transfer does not operate as a transfer of land until the transferee is actually
registered in the registry.
Registration doesn‘t merely record the instrument but passes rights of ownership to the
purchaser.
Responsibility for drafting rests with the purchaser‘s advocates and it is approved by the
vendor‘s advocates.
RLA prescribed form can only be varied by the Registrar‘s written approval
RLA-Land certificate- uses terminology of ‗absolute title‘(applies to freeholds). For
leaseholds one was issued with a certificate of lease (if leasehold was for a period of more
than 25 years)
In drawing the deed of conveyance or transfer you can convey different properties. Under
the RLA the transfer of lease forms allow one to transfer 1-5 and 6-10 properties
respectively.

Essentials of a Valid RLA Transfer

i. Parties- vendor and purchaser
ii. Postal Address of the Parties.
iii. L.R and I.R no’s of the property
iv. Consideration of the property
v. Legal Notices No. 143-146 both parties to sign transfer
vi. L.N no 146-153 of 2005 amended the transfer forms under the RLA. Statutory forms in RTA
and RLA were varied by LN 146-153 to include further details of PIN no, ID, coloured
passport photographs etc.
vii. Directors and Secretary of the Company (photos) for companies.

Responsibility of preparing the transfer is on the purchaser’s advocate but the vendor’s
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advocate has to approve it before his client signs it. Note: the Vendor’s advocate always
prepares the sale agreement.
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The transfer is engrossed in triplicate and sent to the vendor’s advocate. This is done shortly
before completion.
RLA forms are contained in schedule 3 and subject to s.108 RLA (which allows you to vary
the forms subject to the chief lands registrar).

RL 1- Transfer of Land for absolute proprietorship where the title of land is absolute. The particulars
to be included are the title number (from the title deed). In case of joint proprietorship you say
we…..in consideration of Kshs…….. The vendor has to fill in that he acknowledges receipt. You want
to know has the money been sent to you or do you have a professional undertaking. The execution
part of the document the advocate puts his rubber stamp and signs under the heading ‘in the
presence of’ the client signs where it is headed ‘signature’.

The verification part states that a certain person appeared before you have voluntary executed the
transfer and it requires the designation of the person verifying. Verification is only peculiar to RLA
transfers and leases.S.110 RLA. The verification part under the RLA is the certificate referred to
under the RLA. Identification is done by way of I.D No.2.

RL2- Transfer of Lease the distinction is that you are not transferring absolute proprietorship but
leasehold interest. Otherwise the content is quite similar.

RL3 -Transfer of Charge

RL4-Transfer by Chargee- used where a bank for instance is exercising its statutory power of sale-
either by auction or private treaty.

RL5- Transfer of Profit apprendre

RL6 -It is possible for you to have interest in land that is equal to your shares in the buying company.
To effect the transfer of this undivided share- you will have to do this via RL 6. In addition you must
have initially transferred your shares.

RL7-transfer of property where the owner has died. You have to apply for letters of administration
(where there is no will).

Generally you cannot transfer land of a deceased unless you have a confirmed grant. The
schedule of assets is included therein and includes e.g. money, equipment etc.
How the various forms under the RLA differ- Ans do: The Interests being transferred vary (list
them- e.g absolute proprietorship, profit aprendre, leasehold).
Apply for alteration of confirmed grant where property is excluded in the schedule of assets.
You get an extension of lease where the lease has expired. At times it is better to advertise a
caveat emptor in land if it has been excluded from the schedule of assets (before you apply
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for amendment of the confirmed grant.) A temporary grant issued after 30 days only allows
you to deal with personal assets but when it comes to land you are required to have a
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confirmed grant. That’s why the court has to call the interested parties and tell them to
confirm what they have agreed on.
Proprietors in Common- best when buying land if you are brother and sister where you are
able to distinguish who owns what. Your share is defined.
Joint proprietors- best for husband and wife as they buy land as one.
The instrument of transfer is stamped. The original transfer is registered (the original title
deed has to be there).
The registrar of lands registers the transfer and shreds the title that accompanied the
documents on lodging and issues another fresh title.

RTA
S20 RTA- all dealings in land subject to the Act must be in accordance with the Act. Execute
transfer Form F in the first schedule (see S34). There was a requirement for the attestation
of signatures under S58 but no sealing requirement.
Under RTA, s.34 provides the form which is NOT mandatory and you can adjust it mutatis
mutandis. It is in the form of a deed. It does not matter that the interest is a leasehold or
freehold, neither does it matter that the person transferring is not the registered owner.
RTA variations do not require Registrar‘s approval. It is ordinarily prepared as a deed
Both parties must execute- Law of Contract Act S3(3)
Upon registration: RTA- issued with grant (for leasehold or freehold). If a portion of grant is
transferred, a certificate of title is issued;
The transfer is in the prescribed form. The format of the transfer is contained in Form F-
Schedule of the statute.
Under the RTA we have grants (absolute proprietorship.) and certificates of title (leasehold
interest).
Essentials of a Valid RTA Transfer
You have to state who the parties are I.R particulars
The word ‘Transfer’ e.g This instrument of Transfer is made between…..both of p.o
box…….(see precedent).
Successor and Assigns (for companies) or Personal representatives (for individuals).
Form F- check it out. You can only fill it in if you have the title (either grant or certificate of
title). The most important is the description of the Land- Look at the deed plan for the L.R
and the Deed Plan no. The deed plan number is inserted by the surveyor.
The transferor transfers his ‘Rights Title and Interest’. These three words must be there.
RTA Transfers have a memorandum so you have to refer to the GLA (because land was
initially with government). RTA doesn’t have verification segment-but you require
attestation, id and pin numbers.
RTA Transfers do it in triplicate. The Commissioner of lands endorses on title(stamps it).
NB: You may also include properties registered in RTA and RLA in one deed as long as you
obtain permission from the Registrar of Lands. You ought to be careful with the use of
precedents
GLA AND LTA
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Under the GLA and LTA, these are simple deeds in the form “conveyances or assignments”.
A conveyance refers to a document used to transfer an interest registered under GLA or LTA
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An assignment refers to a document used for purposes of transferring an interest registered

under the GLA or LTA which is a leasehold interest.
Under the GLA, one talks about;
a) A deed of conveyance – transfer of freehold
b) A deed of assignment – transfer of conveyance
c) An indenture of conveyance was common during the regime of no requirement for
registration. No need to refer to indenture now.

Essentials of a Valid GLA/LTA Transfer

The transfer is in the form of a Deed. Instead of being signed it is signed sealed and
delivered.
Neither GLA nor ITPA prescribe statutory forms for transfer. The form is governed by English
patterns in accordance with the Real Property Act 1845 and Conveyancing Act of 1881-
these are statutes of General Application in Kenya.
Transfers under freeholds are effected using a conveyance, while for a leasehold uses an
assignment
A deed under GLA or LTA still requires to be registered since no evidence will be received in
a Court of a sale unless it is in writing and is registered. Registration also determines priority
of interests.
The transfer is effected by the completed deed itself (when it is signed sealed and
delivered).
A seal must be placed (paper disc next to the signature). It should also be delivered. There
must be intention to be bound.

IN SUMMARY WHICH REGIME HAS PRESCRIBED FORMS

ACT PRESCRIBED FORMS MANDATORY

RLA YES YES
RTA YES NO
GLA NO N/A
LTA NO N/A

WHAT HAPPENS UPON REGISTRATION

RTA RLA
Issued with a grant (for leasehold or Land certificate is issued which refers to an
freehold). “absolute title” (for freehold) or “certificate
If a portion is transferred that a of lease” (for leases of Over 25 years).
certificate of title is issued.
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The form of Transfer Deed or Instrument will depend on i) the statute under which the property is
registered and ii) the interest to be conveyed or transferred

RLA: GLA and LTA: Transfers will take

RL1- transferring the form of:
freehold land “Conveyance”-transfer of
RL2- transferring RTA: S20 “Transfer “using freehold
leasehold Form F in the first Schedule. “Assignment”-transfer of
RL3- Chargor to bank leasehold
transferring an Requirement for attestation seal must be placed on the
interest or charge but not to seal document near the
RL4- Transfer by signature, and delivered
Chargee there must be an intention
RL5- transfer of to be bound
profit
RL6- Transfer of
undivided share
- Verification of execution
required

Note- the Sectional properties Act has its own prescribe forms for transferring Sectional
Units
Note: Legal notice 143-146 requires both parties to sign the transfer
Note: a transfer does not operate as a transfer of land until the transferee is actually
registered in the registry. Registration passes the right of title to the purchaser.

II. Under the New Regime

Use of prescribed forms – Sec 43 (2) of Land Act, Sec 37 LRA
Sec 37 LRA - If an Advocate chose to use a form other than those prescribed, he must have
them approved by the Registrar.

LAND ACT 2012

43.Transfers
(1) In this Part, “transfer” includes a conveyance, an assignment, a transfer of land, a transfer of
lease or other instrument used in the disposition of an interest in land by way of transfer.
(2) A proprietor may transfer land, a lease or a charge to any person (including himself or
herself), with or without consideration, by an instrument in the prescribed form.
(3) The transfer shall be completed by the registration of the transferee as proprietor of the land,
lease or charge.
(4) The transferee of a charge may require the charger to execute the transfer for the purpose of
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acknowledging the amount due under the charge at the date of execution of the transfer.
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LAND REGISTRATION ACT 2012

37. Transfers
(1) A proprietor may transfer land, a lease or a charge to any person with or without
consideration, by an instrument in the prescribed form or in such other form as the Registrar
may in any particular case approve.
(2) A transfer shall be completed by—
a) filing the instrument; and
b) registration of the transferee as proprietor of the land, lease or charge.

Legal Notices No. 143-146 both parties to sign transfer

NB: a transfer does not operate as a transfer of land until the transferee is actually
registered in the registry. Registration doesn’t merely record the instrument but passes
rights of ownership to the Purchaser.

Upon Registration:

A) Under Land Registration Act

Certificate of Title conclusive evidence of absolute ownership Section 26 (1)

26. Certificate of title to be held as conclusive evidence of proprietorship.

(1) The certificate of title issued by the Registrar upon registration, or to a purchaser of land upon a
transfer or transmission by the proprietor shall be taken by all courts as prima facie evidence
that the person named as proprietor of the land is the absolute and indefeasible owner, subject
to the encumbrances, easements, restrictions and conditions contained or endorsed in the
certificate, and the title of that proprietor shall not be subject to challenge, except—
a) on the ground of fraud or misrepresentation to which the person is proved to be a party;
or
b) where the certificate of title has been acquired illegally, unprocedurally or through a
corrupt scheme.
(2) A certified copy of any registered instrument, signed by the Registrar and sealed with the Seal of
the Registrar, shall be received in evidence in the same manner as the original.

Section 36 (1) LRA dealings in land only in accordance with the Act

36. Dispositions and dealings affecting land.

(1) A lease, charge or interest in land shall not be disposed of or dealt with except in accordance
with this Act, and any attempt to dispose of any lease, charge or interest in land otherwise than
in accordance with this Act or any other law, shall not, extinguish, transfer, vary or affect any
right or interest in that land, or in the land, lease or charge.
(2) Nothing in this section shall be construed as preventing any unregistered instrument from
operating as a contract.
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(3) The Cabinet Secretary may prescribe terms and conditions of sale, which––
a) shall apply to contracts by correspondence, subject to any modification or any stipulation
or any intention to the contrary expressed in the correspondence; and
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available, where express reference is made to those terms and conditions.

(4) Subject to Article 67(2)(c) of the Constitution, the Cabinet Secretary shall make regulations
prescribing the time within which instruments presented for registration must be registered and
providing for the supervision of the registration process to achieve the objectives of efficiency,
transparency and good governance.

Section 37 LRA- transfer by an instrument in prescribed form of from approved by Registrar.

Filing the prescribed from and registration completes the transfer.

37. Transfers
(1) A proprietor may transfer land, a lease or a charge to any person with or without consideration,
by an instrument in the prescribed form or in such other form as the Registrar may in any
particular case approve.
(2) A transfer shall be completed by—
a) Filing the instrument; and
b) Registration of the transferee as proprietor of the land, lease or charge.

Section 40 LRA -Contingency or conditional transfers prohibited. And the transfer to take
effect immediately.

40. Transfer to take effect immediately.

A transfer shall not be expressed to take effect on the happening of any event or on the fulfillment of any
condition or at any future time.

Section 43(2)LRA- Transfer effective only upon registration

43. Instruments of dispositions.

(1) Every instrument effecting a disposition of land under this Act shall be in the form prescribed in
relation to that disposition under this Act or any other written law.
(2) No instrument effecting any disposition of private land under this Act shall operate to sell or
assign land or create, transfer or otherwise affect any land, lease or charge until it has been
registered in accordance with the laws relating to the registration of instruments affecting the
land in respect of which the disposition has been made.
(3) The provisions of subsection (2), shall not apply to any disposition that is exempt from
registration.
(4) This section shall not apply to or affect the operation of any contract for a disposition under this
Act

Section 44(4) LRA-requirement for endorsement (in prescribed manner)of signatures of

persons outside the country.
Section 44 (5) LRA Other requirements are
i. Copy of ID/passport
ii. Copy of PIN
iii. Passport size photographs
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iv. Marriage certificate where applicable

v. Verification of execution required.
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44. Executions of instruments in writing.

(1) Except as otherwise provided in this Act, every instrument effecting any disposition under this
Act shall be executed by each of the parties consenting to it, in accordance with the provisions of
this section.
(2) The execution of any instrument referred to in subsection (1), by a person shall consist of
appending a person’s signature on it or affixing the thumbprint or other mark as evidence of
personal acceptance of that instrument.
(3) The execution of any instrument referred to in subsection (1) by a corporate body, association,
cooperative society or any other organization shall be effected in the presence of either an
advocate of the High Court of Kenya, a magistrate, a Judge or a notary public.
(4) An instrument executed out of Kenya shall not be registered unless it has endorsed o n i t or
attached to it a certificate in the prescribed form completed—
a) if the instrument was executed in the Commonwealth, by a judge, magistrate notary
public, commissioner for oaths; or
b) if the instrument was executed in a foreign country outside the Commonwealth, by any
other person or class of persons as the Cabinet Secretary may prescribe.
(5) The transferee shall in addition to executing the instrument, attach the following-
a) a copy of an identity card or passport; and
b) a copy of a Personal Identification Number certificate;
c) passport-size photographs;
d) where applicable, a marriage certificate; or
e) such other identification documents as the Cabinet Secretary may prescribe.

Title Deed uses terminology of ‘absolute title’ (applies to freeholds).

Section 54 (5)-For long term leaseholds one is issued with a certificate of lease

54. Registration of Leases.

(1) Upon the registration of a lease containing an agreement, express or implied, by the lessee that
the lessee shall not transfer, sub-let, charge or part with possession of any of the leased land
leased without the written consent of the lessor, the agreement shall be noted in the register of
the lease, and no dealing with the lease shall be registered until the consent of the lessor,
verified in accordance with this Act has been produced to the Registrar.
(2) The Registrar, upon receipt of adequate proof, may dispense with the consent of the lessor —(a)
where satisfactory evidence is given to the registrar and the Registrar is satisfied that the lessor is
dead and that there is no personal representative of the lessor; or (b) if the Registrar considers
that the consent of the lessor or the personal representative, as the case may be, cannot be
obtained or that it can only be obtained with difficulty or at an unreasonable expense and shall,
after making such enquiries as the Registrar may consider necessary in the circumstances, record
on the document his or her reasons for dispensing with the consent and note as such in the
register.
(3) The registration of interests in land under the law relating to sectional properties shall be carried
out in the manner prescribed under that Act.
(4) The land register maintained under section 7 of this Act shall be deemed to be the land register
for purposes of the Sectional Properties Act.
(5) The Registrar shall register long-term leases and issue certificates of lease over apartments, flats,
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maisonettes, townhouses or offices having the effect of conferring ownership, if the property
comprised is properly geo-referenced and approved by the statutory body responsible for the
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B) Under the Land Act 2012

Section 43(2) LA- transfer to be effected by an instrument in the prescribed form.

Section 43(3) LA- completion of transfer process only after registration.
Section 44 LA-Transfer to take effect immediately.

43.Transfers
(1) In this Part, “transfer” includes a conveyance, an assignment, a transfer of land, a transfer of
lease or other instrument used in the disposition of an interest in land by way of transfer.
(2) A proprietor may transfer land, a lease or a charge to any person (including himself or herself),
with or without consideration, by an instrument in the prescribed form.
(3) The transfer shall be completed by the registration of the transferee as proprietor of the land,
lease or charge.
(4) The transferee of a charge may require the charger to execute the transfer for the purpose of
acknowledging the amount due under the charge at the date of execution of the transfer.

44. Transfer to take effect immediately.

A transfer shall not be expressed to take effect on the happening of any event or on the fulfillment of any
condition or at any future time.

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PARTS OF A TRANSFER DOCUMENT

No. Part of the Transfer Content in the Part

Document
1. General Part This section is known as the preliminaries. It has three main contents namely
i. Commencement
Commencement – Refers to the title of the deed itself.

ii. Date
The execution date is the most appropriate to insert to the document.
Date stamp duty S6 of the Stamp Duty Act- instruments must be stamped within 30 days of execution. To avoid
this problem the instrument is left undated until when the parties are ready to perfect it.
Ideally put the date of execution by the vendor i.e. when the interest is conferred (practice)
Ensure you get the right date to avoid conflict.

iii. Description of the Parties

Parties – those interested in the transaction.
Get their names, descriptions and personal details right.
Their addresses also need to be correct as it is through this address that any notice will be forwarded to them
e.g. rates demand, land rent demand.
The vendor’s address ought to be the same as the address in the last purchase deed and perhaps even similar
signature to curb fraudulent transactions.

2. Operative Part This part has two main headings with several

A) RECITALS

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The recital has two parts .It begins with the word WHEREAS.

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i. Narrative Recital
The narrative recital sets out the vendor’s title. It makes it easily understood for purposes of the conveyance.

ii. Introductory Recital

The introductory recital explains the purpose or the intended operation of the deed of conveyance/transfer.
It put into effect the agreement that the parties had.

B) TESTATUM
The Testatum is the clause that begins with words such as “NOW THIS DEED WITNESSETH…” or “NOW THIS
LEASE WITNESSETH…..” It is basically a declaration that what follows contains details of the operation of the
deed.
It is a declaration that what follows in the body of the deed contains details of the operation of the deed.
introduces a list of items:

i. Consideration
Consideration(states the whole purchase price)
This refers to the exchange given by the purchaser for the interest in land that he is receiving.
It could be monetary or otherwise i.e. another parcel of land therefore a deed of exchange.
Consideration clause will ordinarily read “In consideration of the sum of KShs.10, 000,000/=the Transferor
hereby transfers to the Transferee all title, right and interest in all the above referenced parcel of land.” Besides
being necessary for purposes of the Stamp Duty Act it is also necessary to avail the purchaser the remedy of
specific performance
Consideration is important because:
a) It is not a voluntary deed and as demanded by the law of contract, one is suffering to part with
something for what they are receiving. Matters as between the Government and parties.

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b) It avails:
The remedy of specific performance
It helps the government to determine how to charge

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ii. Receipt Clause

Receipt clause (optional) shows the vendor acknowledges the receipt of the purchase price.
This is necessary in the body of the deed or in the transfer deed as it enables the purchaser and the purchaser’s
successors in title if any (heir, legal representatives) to avail themselves of various statutory and legal
provisions.
It is an acknowledgement by the vendor that he has received the consideration (operates as a discharge for the
purchase moneys).
It avails to the purchaser and its successors in title, the protection of a bona fide purchaser for value without
notice especially as against third parties.
The receipt clause will read something like “Receipt whereof the transferor hereby acknowledges…”. The
clause avails to the purchaser or transferee the protection under the norm of the bona fide purchaser for value
without notice in the event of any claim by a third party.

iii. Operative Words (Words of Grant)

Word of grant(assigns or conveys)/transfers
These are words of the grant (transfer) and capacity of the parties to issue that grant. It is the statement by the
vendor of what he is doing by virtue of the deed e.g. “the vendor as the beneficial owner doth hereby grant
and convey”
If transferring a:
a) Freehold GLA – convey and grant
b) Leasehold GLA – convey and assign
c) Freehold and leasehold RTA – Simply transfer
d) Charge document – Charge expressly
e) Lease - Issue a demise

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f) Discharge GLA – Release and reconvey
The capacity of parties really matters e.g. This will show existence of power to transfer the property
a) Beneficial owner

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b) Trustee Administrator
c) Attorney

iv. Parcel Clause

Basically it is the description of property
Technical term denoting the description in words of the property being transferred conveyed or assigned.
It should be strictly accurate and includes sketch maps, deed files etc. Includes acreage of land.
If the descriptions are too many you can describe them in the schedule and make reference in the parcels
clause.
A mis-description of the property can be corrected by variation.
Avoid mis-descriptions because vendor can play dirty making your right of rectification useless.
The parcels clause contains in concise terms the physical description or property. Description of the L. R., Title
or I. R., or C. R. Numbers is paramount. E.g. “All that parcel of land known as I. R. No. 94453….” or “all the parcel
of land known as Title Number Nairobi/Block 74/41”. Note however that a false description or mis-description
does not vitiate the deed.

v. Habendum or Quantum of Interest Clause.

This is the quantum of interest being granted
Maps out or defines the interest or the quantum of the estate that is being taken by the purchaser.
If it is a freehold being transferred or conveyed, you should state that you are giving it to be held in fee simple.
If it is a leasehold, there are limitations, state expressly “to hold for a specific term e.g. 99 years, remainder of
the term”
If it is an assignment, state whether you are assigning the balance of your leasehold tenure e.g. the residue of
your time, fifty years less the last 20 years etc (esp in GLA).
Also put any limitations and restrictions e.g. subject to easements, subject to payment of land rates.

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The Habendum clause describes the interest created. It defines the estate conveyed to the transferee or
purchaser. It defines the quantum of interest created. E.g. “The transferor transfers unto the transferee all his
title, right and interest in L. R. No. 209/15432 TO HOLD absolutely …” The reddendum clause appears in leases

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only. It begins with words “YIELDING AND PAYING…” . This part explains the amount of rental payable by the
tenant and when it is to be paid.
vi. Exceptions Clause
Exception (withheld from the purchaser by the vendor especially in an assignment) and reservation (creation of
new right for the vendor eg where the vendor retains part of the land-easement)
3. Miscellaneous Provisions Deals with the Implied covenants especially under the GLA and now LA

Covenants
A covenant is that agreement which not only binds the vendor but also binds his predecessor.
It details and declares all the covenants of the parties.
These are the express agreements and obligations of the parties. For instance in a lease document covenants
will constitute the agreements of the parties such as the agreement to yield back on the part of the tenants
upon expiry, the obligation/agreement on the part of the tenant to pay rent on the date agreed, the
agreement/obligation on the part of the landlord to insure and repair the externals of the structure leased etc.
4 Final Part The final part has the following sub-headings

i. Testimonium /Testimonial
Links the deed with the parties seal and signature.
Not mandatory.
Its inclusion is proof that the deed was duly executed
This is the part that now links the execution or the affirmation of the deed with the rest of the document “IN
WITNESS WHEREOF…”
ii. Execution
Signing and sealing.

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iii. Attestation
The place where the parties sign or cause the common seal to be embedded.
It signifies the intention of the parties that the deed ought to become operative and it is consequently so

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This is where the witnesses to the signature sign. It will contain words such as “In the presence of”. Normally
attestation will be by the parties’ advocate in whose presence the document was signed.

iv. Verification
Legal Notices No.146 – 153 of 2005 require that when you prepare a deed of assignment or transfer, you attach
photographs of the parties
This is the clause that provides that a party appeared before an advocate and was property identified by his I/D
or was personally known to the advocate and that he understood the import or contents of a document and
that he signed voluntarily. It was previously a requirement of certain documents under the RLA but with recent
amendments to the law in November 2005 is now a requirement of practically most conveyancing documents
because of the requirement of passport size photos, PIN and identity card numbers.
Providing the name and address on the conveyance of the advocate who prepares it- S35 Advocates Act
v. Franking
vi. Memorandum

Note:
1. The schedule strictly and ideally speaking out to be inserted between the testimonium and the execution clauses to avoid fraudulent changes there
under.
2. Under the RLA, the forms are very simple i.e.
a) Commencement clause
b) Parties clause
c) Consideration/operative clause
d) No parcels clause as this found in the commencement clause
e) If there are covenants, one has to seek permission to vary the form from the Land Registrar.

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SAMPLE RLA TRANSFER

REPUBLIC OF KENYA

THE REGISTRATION OF TITLES ACT

(CHAPTER 281)

TITLE NUMBER I.R

ANNUAL RENT

TERM…………..

TRANSFER

THIS INSTRUMENT OF TRANSFER is made of P.O. BOX 45733 NAIROBI

hereinafter called the the day of 2005 BETWEEEN “Transferor”
(which expression where the context so admits include his successors and
assigns) on the one part and of P.O. BOX NAIROBI hereinafter referred to as
the “Transferee” (which expression shall where the context so admits include
his successors and assigns) on the second part

WHEREAS:

The Transferor is registered as proprietor as Lessee from the Government of

the Republic of Kenya for the term of Ninety nine Years from the

SUBJECT HOWEVER to such charges, leases and encumbrances as are notified

by the Memorandum endorsed hereon and to the payment of an annual Rent
of Shillings (Revisable) of ALL THAT piece of land situate in
the city of Nairobi in the Nairobi area of Kenya containing by measurement
or thereabouts that is to say Land Reference Number being the premises
comprised in a Grant registered in the Land Titles Registry at Nairobi as I.R
and which said piece of land is with dimensions, abuttal’s and boundaries
thereof delineated on the plan annexed thereto and more particularly on Land
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Survey Plan Number deposited in the Survey Records Office at

Nairobi and thereon bordered red.
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AND WHEREAS

The Transferor has caused the said piece of land to be subdivided out and has
agreed to Transfer to the Transferee Two Portions known as Land Reference
Numbers and in consideration of the sum of Kenya Shillings Six Million Only.(

NOW THIS INSRUMENT WITHNESSETH THAT IN CONSIDERATION of the sum of

( Kshs ) paid by the Transferee to the Transferor ( the receipt

whereof is acknowledged by the Transferor) the Transferor DOTH HEREBY

TRANSFER unto the Transferee all his right, title and interest of and in ALL
THAT Piece of land containing by measurement nought decimal three nine two
six (0.3926 )of an hectare or thereabouts and known as Land reference
numbers and which said pieces of land are a portion of the aforesaid premises
the boundaries and abuttals of which are delineated and described on the plan
annexed hereto and more particularly on survey plan Numbers 2546117 and
25461999 deposited in the survey Records office at Nairobi and thereon
bordered red TO HOLD THE SAME for the term of years from the
day of SUBJECT HOWEVER to such charges, leases and
encumbrances as are notified by the memorandum endorsed hereon and to
the payment of the apportioned annual rent of Shillings
(revisable).

SIGNED BY THE TRANSFEROR )

In the presence of

Advocate )

SIGNED BY THE TRANSFEREE )

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In the presence of

Advocate )
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MEMORANDUM

1. The provisions of the Government Lands Act ( Cap 280 of the Laws of
Kenya)
2. Registration of Titles Act (Cap 281).
3. Special Conditions contained in the Grant Registered as I.R

DRAWN BY:

Koki Mbulu & Co

Advocate

China Centre 2nd Floor

P.O. BOX 22717

00400

NAIROBI

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INTERESTS TO BE TRANSFERRED AND DEEDS OF TRANSFER

RIGHT (FREEDOM) TO TRANSFER

Bill of Rights in the Constitution

i. Article 40(1): Subject to Art. 65, every person has the right to acquire an own property, of any
description and in any part of Kenya.
ii. Article 65- one can only transfer freehold property or leaseholds of over 99 years to Kenyan
citizens any such transfers to non-citizens are deemed to be leasehold for 99 years.

INTERESTS TO BE TRANSFERED

See Section 2 of the Land Act and Land Registration Act

Section 2 Land Act

"transfer" means the passing of land, a lease or a charge from one party to another by an act of the
parties and not by operation of the law and includes the instrument by which such passing is effected;

Section 2 Land Registration Act

"transfer" means—
a) the passing of land, a lease or a charge from one party to another by an act of the parties and
not by operation of the law; or
b) the instrument by which any such passing is effected;

See also Section 37 (1) of the Land Registration Act

37. Transfers
(1) A proprietor may transfer land, a lease or a charge to any person with or without consideration,
by an instrument in the prescribed form or in such other form as the Registrar may in any
particular case approve.
(2) A transfer shall be completed by—
a) filing the instrument; and
b) registration of the transferee as proprietor of the land, lease or charge.

From the above provisions there are 3 types of interest that can be transferred
(1) A Freehold
(2) A Leasehold
(3) Charge

Section 37(2) of Land Registration deals with the transfer of all the 3 types of interests.
Process
a) Filing of the prescribed instrument
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b) Registration of transferee as proprietor of land, lease or charge

Section 32 LRA -produce original & duplicate lease or charge for registration of any disposition
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32. Dispositions of leases and charges.

On the registration of any disposition of a lease or charge, the original and the duplicate of the lease or
charge shall, unless the Registrar is satisfied that they cannot be produced, be produced to the Registrar,
who shall note particulars of the disposition on the lease or charge and on the duplicate.

Note that the lease is limited for non-citizens upto 99 years read Article 65 of the Constitution

Transfer of Freehold

If interest is freehold under RTA repealed we call it TRANSFER – THE DOCUMENT

If dealing with freehold interest under the RLA now repealed, and called absolute
ownership, it is called “TRANSFER”. It was a prescribed form
If the transfer is a freehold under the GLA and LTA now repealed, instrument will be
“CONVEYANCE”.
When selling land There are two stages in a sale of land:
a) Contractual stage
b) Transfer or Conveyance stage, also referred to as the Completion stage.

Agreement for Sale

The rights and liabilities of the vendor and purchaser are usually set out in the Agreement for
Sale.
The vendor and purchaser in a Contract of Sale, that is, Agreement for Sale, may incorporate
the Law Society Conditions of Sale in so far as they are not inconsistent with the conditions
contained in the Agreement for Sale. The Agreement must state the year of the applicable Law
Society Conditions of Sale (1974, 1982 or 1989). Advocates now apply the 1989 Conditions as a
matter of practice.

One Advocate acting for both Vendor and purchaser

Where one advocate acts for both parties, that advocate will be entrusted with the duty of
drafting both the Agreement for Sale and the Transfer.
However, where each party has his own advocate, the usual practice is that the Agreement for
Sale is drafted by the advocate for the vendor and the Transfer by the advocate for the
purchaser. This is provided for by the Advocates Remuneration Order.
The advocates for the parties need to obtain certain particulars/information from their
respective clients. Generally, these are as follows:

Particulars Required (Generally)

The following particulars are required by the Advocates for determination of the provisions to
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include in the Agreement for Sale:

(1) Full names and addresses of the parties and their advocates, if any.
(2) Details of the property and the whereabouts of the documents of title.
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(3) Nature of the interest to be sold - whether freehold or leasehold.

(4) Agents, if any.
(5) Purchase price.
(6) Whether any deposit has been paid and, if so, how much, to whom and in what capacity -
usually paid to the agent of the vendor or vendor's advocate as stakeholder.
(7) Date of possession if different from date of completion.
(8) Whether the property is to be sold with vacant possession.
(9) Completion date - i.e. when the last essentials are carried out and the balance of the purchase
price is paid.
(10) Whether the Land Control Act (Cap 302) applies.
(11) Whether any moveables in the property are to be sold and, if so, their price.
(12) Whether the purchaser is taking over the vendor's insurance or not.
(13) Whether the purchase price or part thereof is being raised on a mortgage or charge by the
purchaser and, if so, on what terms. Usually the balance of the purchase price is paid by the
chargee upon registration of the charge in its favour.

PROCEDURE

There are duties to be performed by the respective advocates. These duties also constitute the
procedure by which the sale is effected. The duties are as follows:

DUTIES OF THE VENDOR'S ADVOCATE

1. Obtain documents of title from the vendor.

2. Investigate title.
3. Draft the Agreement for Sale.
4. Have the Agreement approved by the vendor and purchaser or purchaser's advocate.
5. Engross the approved Agreement.
6. Forward the documents of title to the purchaser’s advocate upon the latter are professional
undertaking.
7. Approve the Transfer on behalf of the vendor.
8. Obtain all the relevant consents and clearance certificates and forward these to the purchaser's
advocate.
9. Have the Transfer executed by the vendor and attested (and verified where applicable).
10. Obtain the balance of the purchase price from the purchaser's advocate for onward
transmission to the vendor.

DUTIES OF THE PURCHASER'S ADVOCATE

1. To carry out a search over the land at the appropriate registry.

2. To examine the documents of title.
3. To make requisitions.
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4. To inspect the property – this is in view of the current situation in Kenya involving fraudulent
land transactions.
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5. To approve the Agreement for Sale.

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6. To send out requisitions if necessary and ensure that the purchaser has inspected the property.
7. To ensure that the vendor has obtained the necessary consent - consent to transfer.
8. To draft the Transfer and have it approved and thereafter engrossed.
9. To prepare and send out a completion statement to the purchaser requesting for funds for
stamp duty, registration fees, legal fees, etc.
10. To send the Transfer to the vendor's advocate for execution by the vendor and attestation and
verification.

11. To have the Transfer executed by the purchaser and attest and verify the purchaser's signature.
12. To carry out a final search immediately before stamping and lodging the documents for
registration.
13. To have the documents stamped and lodged for registration.
14. Upon registration, to release the title documents to the purchaser and the balance of the
purchase price to the vendor's advocate for onward transmission to the vendor.
15. Where the property is being charged, to forward the title and charge documents to the chargee
or its advocate and call for the balance of the purchase price for onward transmission to the
vendor's advocate.
16. To complete accounting and dispose of any other documents as instructed.

Transfer of Leasehold (Leases and Sub-leases):

If the interest is a leasehold: document

RLA (now repealed) Transfer of Lease

RTA Transfer
GLA Assignment
LTA Assignment

Section 45 of the Land Act No.6 of 2012 and Section 71 of Land Act - In a transfer of a
leasehold interest the following are implied:

a) implied warranty that rent, agreements and conditions in Lease have been met by Transferor as
at the transfer date and that these obligations shall be met by transferee from the said date
b)
c) A warranty on the part of the transferor that the rent reserved has been paid and the
covenants contained in the lease have been performed upto the date of the the transfer; and
d) An agreement on the part of the transferee as from the date of the transfer to pay the rent and
observe the covenants contained in the lease.
See also Section 72 of the Land Act the transferor becomes the leasee

45. Transfer of Leases

On the transfer of a lease, unless the contrary is expressed in the transfer, there shall be implied—
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a) a warranty on the part of the transferor that the rent, agreements and conditions on the part of
the lessee to be paid, performed and observed have been so paid, performed and observed up to
the date specified in the transfer or, if no such date is specified, the date of the transfer; and
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date specified in the transfer or the date of the transfer, as the case may be, and to perform and
observe the said agreements and conditions.
71.Transferor or assignor of lease released from liability to pay rent and observe covenants thereafter
(1) In respect of any lease or any transfer or assignment of a lease or part of it made or coming into
effect on or after the date of the commencement of this Act,—
a) the rule of the common law that a transferor or assignor of a lease remains liable on the
personal covenant to the lessor for payment of rent and for all breaches of covenants,
notwithstanding that the transferor or assignor is no longer in possession or occupation
of the leased land, shall cease to apply; and
b) the effect of a transfer or assignment of a lease is, as from that date, to discharge
absolutely and without more the transferor or assignor from any obligation to pay rent
or to observe any covenants in respect of the land as from the date of the transfer or
assignment, whether the person to whom the lease has been transferred or assigned is
in or goes immediately into occupation or possession of the land so transferred or
assigned.
(2) As long as the transferor or assignor remains in occupation of the leased land and
notwithstanding the transfer or assignment, that transferor or assignor shall remain liable to pay
rent and comply with all the covenants as if the person were still the lessee for as long as the
person shall remain in occupation.
(3) Subsection (1) shall not absolve a transferor or assignor of a lease from any obligation to pay rent
or remedy and breach of a covenant that accrued or arose during the term of the lease when
that transferor or assignor was bound by all the covenants in that lease and the lessor may
enforce all such obligations of that lease that have so accrued or arisen against that transferor or
assignor notwithstanding that the lease has been transferred or assigned.
(4) As from the date of the commencement of this Act—
a) the rule of common law that a lessee remains liable to pay rent and comply with all the
covenants notwithstanding that the lessee has, with the agreement of the lessor,
vacated the leased land before the date for the termination of the lease, shall cease to
apply; and
b) Sub-section (5) shall forthwith apply.
(5) A lessee who, with the agreement of the lessor, vacates land before the termination of a lease
shall remain liable to pay rent and observe all the covenants in the lease for one year from the
date on which the lessee vacates the land or buildings, unless the lease provides expressly for a
shorter period, and if the lessor leases that land or any buildings to another person before the
end of one year, the provisions of subsection (1) shall apply, with effect from the date of the
execution of that lease.
(6) Subsection (1) shall not absolve a lessee to whom subsection (5) applies, from any obligation to
pay rent or remedy a breach of a covenant that accrued or arose during the term of the lease
when that lessee was bound by all the covenants in that lease and the lessor may enforce all
such obligations of that lease that have accrued or arisen against that lessee notwithstanding the
fact that the lessee has vacated the land.
(7) The provisions of subsections (1) and (5) shall apply in a similar manner to the transfer, or
assignment of a lease of a part of the leased land and to the vacating of a part of the leased land
as they apply to the transfer of assignment of the lease of all the land and the vacating of all the
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land comprised in the lease.

(8) Any term expressed or implied in a lease or in a condition or covenant in a lease that is in conflict
with this section shall be void.
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72.Transferor or assignee as lessee

(1) A person who accepts a transfer or assignment of a lease shall become the lessee and shall not
be required to—
a) Acknowledge the lessor as such ;
b) Take possession of the land or building that is the subject of the lease.
(2) A person to whom this section applies who becomes a lessee—
a) Shall pay the lessor the rent payable under the lease;
b) Shall observe and perform all the covenants on the part of the lessee expressed or
implied in the lease; and
c) May enforce all covenants made by and binding on the lessor expressed or implied in the
lease.

Transfer of Charge

Section 86 (1) of the Land Act-Chargor (or anyone with an interest in land that is charged, any
surety for the payment of an amount secured by a charge, any creditor of the chargor who has
obtained a decree for sale-with the consent of the chargor) may request the chargee to transfer
the charge to a person named in the request.
Section 87 of Land Act- Chargor’s consent to transfer charge required if the charge instrument
expressly or impliedly says so.

86. Transfer of charge.

(1) A chargor or any person referred to in subsection (2) may, at any time, other than a time when
the chargee is in possession of the charged land, in writing, request the chargee to transfer the
charge to a person named in the request.
(2) Subject to the consent of the chargor which shall not be unreasonably withheld, the other
persons who may make a written request under subsection (1) are—
a) any person who has an interest in the land, lease or land, that is the subject of the
charge;
b) any surety for the payment of the amount secured by the charge; and
c) any creditor of the chargor who has obtained a decree for sale of the land, lease or
charge, that is the subject of the charge.
(3) The charge shall, on receiving a written request made under subsection (1) and on payment by
the person or persons making the request of all money that would have been payable if
discharge of the charge had been made under section 102, and the performance of all other
obligations secured by the charge, transfer the charge to the person named in the written
request.
87. Chargee’s consent to transfer.
If a charge contains a condition, express or implied that chargor prohibits the chargee from, transferring,
assigning, leasing, or in the case of a lease, subleasing the land, without the consent of the chargee, no
transfer, assignment, lease or sublease shall be registered until the written consent of the chargee has
been produced to the Registrar.
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Assignments, Transfer of Profit, Transfer of Undivided Share

Assignment of Leases

Definition of Assignment

The transfer of the whole of the interest of a lessor or lessee under a lease to a third party.
Takes place when a third party takes the identical term which the lessor or lessee holds in
respect of a leasehold interest.
Assignor – the person who makes the assignment.
Assignee – the person to whom an assignment is made.
The whole interest must be transferred. The lessor must assign the whole of his interest
including the reversion. The lessee must assign the whole of his term. If there is a remainder
of the term, the whole remainder must be assigned. There would be no assignment if the
assignor were to reserve a part of the term for himself
An assignee can therefore be:
a) A third party to whom the lessor passes the reversion; or
b) A third party to whom the lessee passes the term of years.

PROFITS

Profit a prendre (in french for right of taking) Right to enter another’s land and take
something usually natural resources from that land capable of ownership e.g. right to catch
fish, graze, hunt, cut trees, fetch clay, petroleum, minerals.
You cannot have a profit to take away minerals and water. Why?
Profits are treated as over-riding interests. See Section 28 of LRA

Consideration: Transfer with and without Consideration:

What is Consideration?

A person is allowed to transfer an interest in land either with or without consideration. See
Section 43(2)LA

43.Transfers
(1) In this Part, “transfer” includes a conveyance, an assignment, a transfer of land, a transfer of
lease or other instrument used in the disposition of an interest in land by way of transfer.
(2) A proprietor may transfer land, a lease or a charge to any person (including himself or herself),
with or without consideration, by an instrument in the prescribed form.
(3) The transfer shall be completed by the registration of the transferee as proprietor of the land,
lease or charge.
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(4) The transferee of a charge may require the chargor to execute the transfer for the purpose of
acknowledging the amount due under the charge at the date of execution of the transfer.
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Transfer without consideration is subject to any other unregistered rights, bankruptcy and
winding up law relating to companies. Section 27 (1) of LRA
Once Registered (with or without consideration have the same effect in law) S27(2) LRA
same effect as transfer with consideration
What of the requirement of consideration for a contract to be valid?
There is an exception to this rule where consideration is not valuable i.e. no money is paid

27. Transfer without valuable consideration.

(1) A proprietor who has acquired land, a lease or a charge by transfer without valuable consideration
shall hold it subject to –
a) any unregistered rights or interests subject to which the transferor held it;
b) the law relating to Bankruptcy; and
c) the winding-up provisions of the Companies Act.
(2) Notwithstanding subsection (1), the transfer when registered, shall have the same effect as a
transfer for valuable consideration.

Transfer ‘without consideration’

To oneself
–Change of name
To spouse
To beneficiaries
Gift

GIFT

Consideration is love and affection

When does the property pass? Conditions:
i. For title to pass, the donor needs to do what is to be done to pass the interest: sign transfer,
get the consents if any etc.
ii. Donee to accept gift in the lifetime of the donor
iii. The donor needs to do what he must to enable passing of property
iv. It must be effected by a registered instrument and the donor must comply with all the
statutory requirements relating to the transfer eg LCB consent where necessary etc

Classicus: The Registered Trustees Anglican Church of Kenya Mbeere Diocese v Rev. David
Waweru Njoroge (2007) eKLR

The Registered Trustees Anglican Church of Kenya Mbeere Diocese v Rev. David Waweru Njoroge
(2007) eKLR
The Respondent(Rev. Waweru), had donated his land to the church. He obtained LCB consent and
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executed the transfer but it was not registered due to a court matter over the property. He later sought
to reclaim it from the church through court action after he resigned from the church service. The
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superior court held in his favour. The Court of Appeal held in favour of the Church using the above

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principle that where the donor has fulfilled all legal requirements of a transferor, the property belongs to
the donee.

See Section 49 LRA- donee with legal incapacity may transfer back property within 6 months
after the end of incapacity.

49. Gift to person under incapacity.

A person with a legal incapacity who has been registered as a proprietor of land, a lease or a charge
acquired by way of gift may, repudiate the gift within six months after the person ceases to be under a
legal incapacity, if the person has not already disposed of the subject-matter, but no such repudiation
shall be effective until—
a) the person has transferred the land, lease or charge to the donor, who is bound to accept it; and
b) the transfer has been registered.

INVOLUTARY TRANSFERS (BY OPERATION OF THE LAW)

This is also known as Transmission

A transmission is a transaction where property passes by operation of law.

UNDER THE OLD REGIME

A transmission is the passing of an interest in land by instance of law.

It will occur mostly in instances of death of a proprietor and insolvency of a proprietor, it can
occur through processes such as adverse possession.
In death you have both testate and intestate succession and the Law of Succession Act
comes into play.
Once probate has been granted, there is transfer of land from the dead to the people who
have been granted probate or letters of administration.
If it is an RTA or GLA one registers the confirmed grant as the owner and if under RLA one
registers the administrator as proprietor using form RLA19 which authorizes the person to
transfer the land to any beneficiaries.
If selling the land use Form RLA 7 to transfer the land after being registered as the property.
In the case of joint proprietors, no instrument will be required as ownership is in undivided
shares mostly in husband and wife scenarios and whoever predeceases the other the share
reverts to the other joint owner. A transmission is by way of registering the death certificate
in the register.
Under the GLA or LTA one has an assent prepared to effect transfer of an interest upon
death and the recitals in the assent will contain details of what is contained in the grant or in
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the grant of letters of administration.

Compulsory acquisition is the preserve of government and can only be done for public
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interest and compensation must be paid. Requisite notices must be served and the client

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obtains a second opinion as to the value of his land other than the one given by the
government.

DIFFERENT FORMS OF TRANSMISSION

1. Company Liquidation

S53 LA and S64 LRA provide that if a company is being wound up, liquidators shall present
the registrar any resolution appointing the liquidator which he shall enter in the register,
and any instrument thereafter executed by or on behalf of the company shall be sealed with
the common seal of the company and attested to by the liquidator.

Land Act
53. Transmission upon company’s liquidation.
(1) If a company is being wound up, the liquidator shall—
a) produce to the Registrar a resolution or order appointing the liquidator; and
b) satisfy the Registrar that the person has complied with the Companies Act, and the
Registrar shall enter the appointment in respect of any land, lease or charge of which
the company is registered as proprietor, and file the copy of the resolution or order.
(2) An instrument executed by or on behalf of a company in liquidation delivered for registration
after the appointment of the liquidator has been entered under subsection (1) shall be sealed
with the common seal of the company and attested to by the liquidator or, in the case of a
company not required by law to have a common seal, shall be signed by the liquidator whose
signature shall be verified in accordance with the relevant law.
(3) Where a vesting order has been made under section 240 of the Companies Act, the liquidator
shall present the order and the Registrar shall register the liquidator as proprietor of any land,
lease or charge to which the order relates.
Land Registration Act
64. Liquidation
(1) If a company is being wound up, the liquidator shall—
a) Produce to the Registrar any resolution or order appointing the liquidator; and Cap.
486.
b) Satisfy the Registrar that the person has complied with the Companies Act, and the
Registrar shall enter the appointment in respect of any land, lease or charge of which
the company is registered as proprietor, and file the copy of the resolution or order.
(2) An instrument executed by or on behalf of a company in liquidation that has been presented
for registration after the appointment of the liquidator has been entered under subsection (1)
shall be sealed with the common seal of the company and attested by the liquidator or, in the
case of a company not required by law to have a common seal, and be signed by the liquidator
whose signature shall be verified in accordance with section 45.
(3) Where a vesting order has been made under the Companies Act, the liquidator shall present the
order to the Registrar who shall register the liquidator as proprietor of any land, lease or charge
to which the order relates.
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2. Bankruptcy

When debtor commits an act of bankruptcy, he or creditors may file petition after which a
receiving order is made (places control of property in the hands of official receiver appointed
by Court).
A further order called an adjudication order is made and his property then passes to the
trustee in bankruptcy for distribution among creditors. The transfer to the trustee in
bankruptcy is effected through the registration of the adjudication order by the registrar.
If a debtor dies insolvent, the personal representatives can follow the same process
S52 LA and S63LRA provide that upon the production to the registrar of a certified copy of
the order of the court adjudicating a proprietor bankrupt, or directing that the estate of the
deceased proprietor shall be administered according to the law of bankruptcy;

o A copy of the order shall be filed with the registrar; and

o The trustee in bankruptcy shall be registered as proprietor of any land, lease or
charge of which the bankrupt or the deceased proprietor is proprietor, in place of
the bankrupt or deceased

If a further order called an adjudication order is made his property then passes to the
trustee in bankruptcy for distribution among creditors. The transfer to the trustee in
bankruptcy is effected through the registration of the adjudication order by the registrar.
If debtor dies insolvent, the PR’s can follow the same process.

Land Act
52.Transmission on bankruptcy
(1) Upon production to the Registrar of a certified copy of the order of court adjudging a proprietor
bankrupt, or directing that the estate of a deceased proprietor shall be administered according to
the law of bankruptcy—
a) a copy of the order shall be filed with the registrar; and
b) the trustee in bankruptcy shall be registered as proprietor of any land, lease or charge of
which the bankrupt or the deceased proprietor is proprietor, in place of the bankrupt or
deceased proprietor.
(2) A trustee in bankruptcy shall be described in the register as “trustee of the property of
(............................), a bankrupt”.
Land Registration Act

63. Transmission on bankruptcy.

(1) Upon production to the Registrar of a certified copy of the order of court adjudging a proprietor
bankrupt, or directing that the estate of a deceased proprietor be administered according to the
law on bankruptcy—
a) a copy of the order shall be filed; and
b) the trustee in bankruptcy shall be registered as proprietor of any land, lease or charge of
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which the bankrupt or the deceased proprietor is proprietor, in place of the bankrupt or
deceased proprietor.
(2) A trustee in bankruptcy shall be described in the register as “trustee of the property of
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............................, a bankrupt”

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3. Vesting Orders

A court order that creates or transfers legal ownership of a property in place of a legal
conveyance.
These are orders by the court for the purposes of conveying or creating a legal interest or
estate and they operate to vest the estate in the same manner as if it had been a
conveyance, transfer or an assignment executed by the estate owner.
It is executed by the judge who makes the order. NOTE that the magistrate courts do not
have jurisdiction.
The jurisdiction of the judge is found in S45 of the Trustees Act when:
i. Court ordered purchases/sales of mortgaged land s48
ii. Specific performance of contract where parties are Trustees-s 49 the court grants such an
order on the part of the vendor, the reason the vendor goes to court is because he has
refused to sign it. S49 avails this remedy and it is the judge who signs off.
iii. Trustee has not exercised their duty in the disposition of interests in property s45
iv. Interests in land subject to a contingent right of an unborn person, when born court may
make an order-s 46
v. Infant mortgagees-S47

CHAPTER 167

THE TRUSTEE ACT

VESTING ORDERS

45. Vetting orders of land.

In any of the following cases-

a) where the court appoints or has appointed a trustee, or where a trustee has been appointed out
of court under any statutory or express power,
b) where a trustee entitled to or possessed of any land or interest therein, whether by way of
mortgage or otherwise, or entitled to a contingent right therein, either solely or jointly with any
other person-
i. is under disability; or
ii. is out of the jurisdiction of the court; or
iii. cannot be found, or, being a corporation, has been dissolved;
c) where it is uncertain who was the survivor of two or more trustees jointly entitled to or
possessed of any interest in land;
d) where it is uncertain whether the last trustee known to have been entitled to or possessed of
any interest in land is living or dead;
e) where there is no personal representative of a deceased trustee who was entitled to or
234

possessed of any interest in land, or where it is uncertain who is the personal representative of a
deceased trustee who was entitled to or possessed of any interest in land;
f) where a trustee jointly or solely entitled to or possessed of any interest in land, or entitled to a
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conveyance of the land or interest or a release of the right, to convey the land or interest or to
release the right, and has wilfully refused or neglected to convey the land or interest or release
the right for twenty-eight days after the date of the requirement:
g) where land or any interest therein is vested in a trustee, whether by way of mortgage or
otherwise, and it appears to the court to be expedient; the court may make an order (in this Act
called a vesting order) vesting the land or interest therein in any such person in any such manner
and for any such estate or interest as the court may direct, or releasing or disposing of the
contingent right to such person as the court may direct:

Provided that-

i. where the order is consequential on the appointment of a trustee, the land or interest therein
shall be vested for such estate as the court may direct in the persons who, on the appointment,
are the trustees: and
ii. where the order relates to a trustee entitled or formerly entitled jointly with another person, and
that trustee is under disability or out of the jurisdiction of the court or cannot be found, or being
a corporation has been dissolved, the land, interest or right shall be vested in the other person
who remains entitled, either alone or with any other person the court may appoint.

46. Orders as to contingent rights of unborn persons.

Where any interest in land is subject to a contingent right in an unborn person or class of unborn persons
who, on coming into existence, would, in respect thereof, become entitled to or possessed of that
interest on any trust, the court may make an order releasing the land or interest therein from the
contingent right, or may make an order vesting in any person the estate or interest to or of which the
unborn person or class of unborn persons would, on coming into existence, be entitled or possessed in
the land.

47. Vesting order in place of conveyance by infant mortgagee.

Where any person entitled to or possessed of any interest in land. or entitled to a contingent right in
land, by way of security for money, is an infant, the court may make an order vesting or releasing or
disposing of the interest in the land or the right in the same manner as in the case of a trustee under
disability.

48. Vesting order consequential on order for sale or mortgage of land.

Where any court gives a judgment or makes an order directing the sale or mortgage of any land, every
person who is entitled to or possessed of any interest in the land, or entitled to a contingent right
therein, and is a party to the action or proceeding in which the judgment or order is given or made or is
otherwise bound by the judgment or order, shall be deemed to be so entitled or possessed, as the case
may be, as a trustee for the purposes of this Act, and the court may make an order vesting the land or
any part thereof for such estate or interest as the court thinks fit in the purchaser or mortgagee or in any
other person.
235

49. Vesting order consequential on judgment for specific performance, etc.

Where a judgment is given for the specific performance of a contract concerning any interest in land, or
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of any interest in land either in cases arising out of the doctrine of election or otherwise, the court may
declare-
a) that any of the parties to the action are trustees of any interest in the land or any part thereof
within the meaning of this Act; or
b) that the interests of unborn persons who might claim under any party to the action, or under the
will or voluntary settlement of any deceased person who was during his lifetime a party to the
contract or transaction concerning which the judgment is given, are the interests of persons who,
on coming into existence, would be trustees within the meaning of this Act;
and thereupon the court may make a vesting order relating to the rights of those persons, born and
unborn, as if they had been trustees.

4. In Other Cases

S54 LA and S65 LRA- if a person has become entitled to any land, lease or charge under any
law or by virtue of any order or certificate of sale made or issued under any law, the
Registrar, on the application of any interested person supported by such evidence as the
person may require, shall register the person entitled as the proprietor.
The two sections have the same reading

Land Act

54. Transmission in other cases.

If a person has become entitled to any land, lease or charge under any law or by virtue of any order or
certificate of sale made or issued under any law, the Registrar, on the application of any interested
person supported by such evidence as the person may require, shall register the person entitled, as the
proprietor.

Attachment for debt: Order 22 Rule 55

[Order 22, rule 55.]

55. Power to order property attached to be sold and proceeds to be paid to person entitled.
Any court executing a decree may order that any property attached by it and liable to sale, or such
portion thereof as may seem necessary to satisfy the decree, shall be sold, and that the proceeds of
such sale, or a sufficient portion thereof, shall be paid to the party entitled under the decree to receive
the same.

5. Death

a) Sole proprietor or proprietor in common:

Testate/will: executor will prove the Will in court and obtain probate, apply to the Registrar
236

in the prescribed form and produce a grant. He will then be registered by transmission as
proprietor or the registrar may register any transfer by him directly to a third party without
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See Section 50 LA and S61 LRA.

Transmission on death of a sole proprietor or proprietor in common.

(1) If a sole proprietor or a proprietor in common dies, the proprietor’s personal representative
shall, on application to the Registrar in the prescribed form and on production to the Registrar of
the grant, be entitled to be registered by transmission as proprietor in the place of the deceased
with the addition after the representative’s name of the words “as executor of the will of
(..........................) [deceased]” or “as administrator of the estate of (..............................)
[deceased]”, as the case may be.
(2) Upon production of a grant, the Registrar may, without requiring the personal representative to
be registered, register by transmission—
a) any transfer by the personal representative; and
b) any surrender of a lease or discharge of a charge by the personal representative.
(3) In this section, “grant” means the grant of probate of the will, the grant of letters of
administration of the estate or the grant of summary administration of the estate in favour of or
issued by the Public Trustee, as the case may be,of the deceased proprietor.

b) Joint Tenancy-
Property passes to the surviving tenant under the doctrine of jus acrescendi. The registrar is
required to register the death certificate and delete the name of the deceased from the
register on production of the death certificate-See Section S49 LA and S60 LRA

Section S49 LA and S60 LRA

Transmission on death of joint proprietor.

If any of the joint t e n a n t s of any land, lease or charge dies, the Registrar shall, upon proof of the
death, delete the name of the deceased tenant from the register by registering the death certificate.

c) Escheat
When the deceased has no heirs to his property. The property reverts back to the state. It
used to be covered by S8 GLA now repealed.

6. Adverse Possession

S7 Limitations of Actions Act provides that an action may not be brought by any person to
recover land after the end of 12 years from the date on which the right of action accrued to
him or, if it first accrued to some person through whom he claims to that person.
This is compounded by S17 which provides that after the expiry of 12 years, the title of that
person to the land is extinguished.
By S37 where land is not registered, such title is not extinguished but is held by the person
registered as proprietor on trust for the person who has acquired title against any person
registered as the proprietor.
By S38 where a person claims to have become entitled by adverse possession to land
237

registered, he may apply to the high court for an order that he be registered as the
proprietor of the land in place of the person then registered as proprietor until he obtains a
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vesting order from the high court.

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LIMITATION OF ACTION ACT CAP 22

7. Actions to recover land.
An action may not be brought by any person to recover land after the end of twelve years from the date
on which the right of ac accrued to him or, if it first accrued to some person through whom he claims, to
that person.

17. Title extinguished at end of limitation period.

Subject to section 18, at the expiration of the period prescribed by this Act for a person to bring an
action to recover land (including a redemption action), the title of that person to the land is
extinguished.

37. Application of Act to registered land.

This Act applies to land registered under the Government Lands Act, the Registration of Titles Act, the
Land Titles Act or the Registered Land Act, in the same manner and to the same extent as it applies to
land not so registered, except that –
a) where, if the land were not so registered, the title of the person registered as proprietor would
be extinguished, such title is not extinguished but is held by the person registered as proprietor
for the time being in trust for the person who, by virtue of this Act, has acquired title against
any person registered as proprietor, but without prejudice to the estate or interest of any other
person interested in the land whose estate or interest is not extinguished by this Act;
b) an easement acquired under section 32 of this Act does not come into being until a copy of the
judgment establishing the right to the easement has been registered against the title to the land
affected thereby, but is, until that time, held by the person for the time being registered as
proprietor in trust for the person who has acquired it.

38. Registration of title to land or easement acquired under Act.

(1) Where a person claims to have become entitled by adverse possession to land registered under
any of the Acts cited in section 37, or land comprised in a lease registered under any of those
Acts, he may apply to the High Court for an order that he be registered as the proprietor of the
land or lease in place of the person then registered as proprietor of the land.
(2) An order made under subsection (1) shall on registration take effect subject to any entry on the
register which has not been extinguished under this Act.
(3) A proprietor of land who has acquired a right to an easement under section 32 may apply to the
High Court for an order vesting the easement in him, and may register any order so obtained in
the register of the land or lease affected by the easement and in the register of the land or lease
for whose benefit it has been acquired, and the easement comes into being upon such
registration being made, but not before.
(4) The proprietor, the applicant and any other person interested may apply to the High Court for
the determination of any question arising under this section.
(5) The Minister for the time being responsible for land may make rules for facilitating the
registration of titles to land or to easements acquired under this Act.

Note that possession alone is not enough, there must be proof of adverse possession:
238

Bwana v. Ibrahim. Basic requirements are:

o open and notorious use;
o intention to possess;
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o exclusive use, to the exclusion of the owner;

o actual possession;
o non permissive, hostile/adverse use without the owner’s permission and
inconsistent whit his rights.

Karanja Matheri v. Kanji; Gatimu v. Kunguru: The courts can order registration of one as a
proprietor even though no consent has been obtained.

7. Compulsory Acquisition

The State is the owner of radical title- eminent domain.

The Land Act (S107-133) and the Constitution (Article 40 (3) (b)) gives the state the power to
compulsory acquires land for public purposes.
The purpose has to be greater public interest. See Mohammed v Commissioner of Lands
and others(2006)KLR (E&L) 217
If public purpose or interest ceases to exist, the Commissioner may offer the original owner
pre-emptive rights to reacquire the property.-S110 LA
Compensation for a compulsory acquisition is the market value plus 15% to be paid by the
state. See Eunice Grace Njambi Kamau & Another –vs- A.G & Others (2013) eKLR; Nrb HCC
976/2012
Though by S111 LA the NLC is to make rules to ascertain just compensation. One can be
given land in lieu of the award
Note, by virtue of S132 LA, compulsory acquisitions are exempt from Stamp Duty.

MATRIMONIAL PROPERTY

Section 6 of the Matrimonial Property Act defines what is Matrimonial Property

Section 6 (3) gives room for pre-nuptial agreements.

6. Meaning of matrimonial property

(1) For the purposes of this Act, matrimonial property means—
(a) The matrimonial home or homes;
(b) Household goods and effects in the matrimonial home or homes; or
(c) Any other immovable and movable property jointly owned and acquired during the
subsistence of the marriage.
(2) Despite subsection (1), trust property, including property held in trust under customary law,
does not form part of matrimonial property.
(3) Despite subsection (1), the parties to an intended marriage may enter into an agreement before
their marriage to determine their property rights.
(4) A party to an agreement made under subsection (3) may apply to the Court to set aside the
agreement and the Court may set aside the agreement if it determines that the agreement was
influenced by fraud, coercion or is manifestly unjust
239

Section 2 defines what Contribution is and Section 9 allows for acquisition of beneficial
interest through improvement.
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“contribution” means monetary and non-monetary contribution and includes—

(a) domestic work and management of the matrimonial home;
(b) child care;
(c) companionship;
(d) management of family business or property; and
(e) farm work;

“family business” means any business which—

(a) is run for the benefit of the family by both spouses or either spouse; and
(b) generates income or other resources wholly or part of which are for the benefit of the
family;
9. Acquisition of interest in property by contribution
Where one spouse acquires property before or during the marriage and the property acquired during
the marriage does not become matrimonial property, but the other spouse makes a contribution
towards the improvement of the property, the spouse who makes a contribution acquires a beneficial
interest in the property equal to the contribution made.

The spouses consent is required before one can transfer interest in property in a
Matrimonial Property. See Section 12 of the Matrimonial Property Act. See also Section 28
of the Land Registration Act where there is an over-riding interest on spousal rights in
matrimonial property

12. Special provisions relating to matrimonial property

(1) An estate or interest in any matrimonial property shall not, during the subsistence of a
monogamous marriage and without the consent of both spouses, be alienated in any form,
whether by way of sale, gift, lease, mortgage or otherwise.
(2) A spouse in a monogamous marriage, or in the case of a polygamous marriage, the man and any
of the man’s wives, have an interest in matrimonial property capable of protection by caveat,
caution or otherwise under any law for the time being in force relating to the registration of title
to land or of deeds.
(3) A spouse shall not, during the subsistence of the marriage, be evicted from the matrimonial
home by or at the instance of the other spouse except by order of a court.
(4) Subject to subsection (3), a spouse shall not be evicted from the matrimonial home by any
person except—
(a) on the sale of any estate or interest in the matrimonial home in execution of a decree;
(b) by a trustee in bankruptcy; or
(c) by a mortgagee or charge in exercise of a power of sale or other remedy given under
any law.
(5) The matrimonial home shall not be mortgaged or leased without the written and informed
consent of both spouses.
240

See the following cases which illustrates the changing Jurisprudence in cases involving
matrimonial property
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Petit vs. Petit, 1969 All ER 385

Wife bought property in her name, husband only painted. The court held that he was not entitled to the
property.

Gissing vs. Gissing 1970 2AllER 780

Wife was considered to have directly contributed.

I v I 1971 EA 278,
Established the applicability of MWPA in Kenya.

Karanja v Karanja 1976 KLR 307

The couple were both salaried, it was held that the wife was entitled to the property and her part was
held by the husband in trust for her.

Njuguna v Njuguna 1986 LLR 823(HCK)

The Court recognized non-direct contribution.

Kivuitu v Kivuitu 1991 KLR 248

Purchase price paid by the husband (deposited by the wife while he was abroad). It was registered in
joint names. The wife sought to sell it and have her equal share. The Court established that indirect
contribution can lead to equal distribution of the property. But this was overruled in Echaria v. Echaria.

The Constitution of Kenya 2010 became the deal breaker and game changer in the division
of matrimonial property law.
The new constitutional dispensation requires matrimonial property to be divided equally
after divorce.
The magic stroke is Article 45 (3) providing that:

Parties to a marriage are entitled to equal rights at the time of marriage, during the
marriage and at the dissolution of the marriage

CMN v. AWM [2013] eKLR

Where the husband had singularly financed the matrimonial house but when after divorce, the court
decreed that the house had to be divided equally between the parties. In rendering deadly blow to the
past inequality the learned judge had this to say:

The legal landscape has since changed so that it is no longer a question of how much each
spouse contributed towards the purchase of the property which matters …the legal provision in
force now requires this court to apply the principle of equality instead. This court is duty bound
to share the Suit Property [matrimonial house] equally between the Plaintiff [husband] and the
Defendant [wife].
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SURVEY & SUBDIVISION SALES:

There has been increasing subdivision of land in the property market

Many subdivisions and amalgamations are managed by private surveyors but under the
Director of Surveys see Section 22 of the Survey Act (cap 299).
Section 22 LRA, proprietor applies to Registrar to subdivide and Registrar closes the register
of the main parcel then opens new registers in respect of the new parcels.
22. Combinations and subdivisions.
(1) Subject to authentication of the cadastral map, if contiguous parcels are owned by the same
proprietor and are subject in all respects to the same rights and obligations, the Registrar, on
application by the proprietor, may combine these parcels by closing the registers relating to
them and opening a new register or registers in respect of the parcel or parcels resulting from
the combination.
(2) Upon the application of a proprietor of a parcel for the division of that parcel into two or more
parcels, and authentication of the cadastral map, the Registrar shall effect the division by
closing the register relating to the parcel and opening new registers in respect of the new
parcels resulting from the division, and recording in the new registers all subsisting entries
appearing in the closed register:

Provided that nothing shall be done under this section that would be inconsistent with the provisions
of this Act or any other written law.

Section 42 LRA prohibits part transfers before formal subdivision.

42. Transfer of part.
No part of the land comprised in a register shall be transferred unless the proprietor has first
subdivided the land and duly registered each new subdivision.

The proprietor hires a physical planner and land surveyor to develop a

subdivision/amalgamation report (Mutation)
Report presented to council meeting and discussed by technical committee who may make
suggestions on plot sizes, roads etc
Report amended, Council Planner issues a letter approving the subdivision as per the report
and sets out conditions to be met before MoL can issue titles e.g. infrastructural
development (roads, water, storm drainage, sewer, electricity.
The Land owner takes the approval letter to MoL to process titles.
The Chief Land Registrar circulates the application for approval to Director of Physical
Planning and Director of Survey
If approved CLR issues conditional approval and sets out fees payable and conditions to be
complied with.
Application sent for valuation, to ascertain new Land rent
CLR grants final approval after Council gives final approval
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LECTURE 9: FRIDAY 8-22 JULY 2016- MORNING SESSION (LECTURE HALL A)

TOPIC 9: SUB-LEASES AND SECTIONAL PROPERTIES

Background

In the past, land for residential development in urban centres was readily and cheaply
available. This led to emphasis on individual houses.
In the recent past:
i. Escalating value of land
ii. Diminishing stock of land
iii. Increasing cost of building materials

Kenya’s urban areas are increasingly overwhelmed by large numbers of rural urban
immigrants. Urban populations are also soaring due to the factors outlined herein-above.
The need for urban housing have led to lots of investments by private developers the
motivation being the quick and huge profits that accrue from these particular investments.
Investments in the real property market has also led to considerable professional work for
lawyers, architects, engineers, valuers, estate agency professionals, planners, etc.
Due to the finite nature of land a lot of developers are opting to build flats and/or
apartments.
Planning and budgetary restrictions have however led to fewer units than the actual
potential of the land.
There has not been a lot of development for low cost housing for the low and middle income
earners
Most of these developments by private sector actors are not necessarily supported by the
required infrastructural services necessary for the developments such as water, sewer,
roads, etc.
A lot of planning issues are ignored and zoning requirements are not necessarily obeyed.
This has prompted various jurisdictions to search for solutions such as registration of
properties in strata.
Under RLA, RTA and Registration of Documents Act-transfer of flats and other building
portions (usually took the form of a lease) would be registered by using the architects plan
which identified the units and was registered under the Registration of Documents Act.
The undivided share of the land would also be made to the unit purchasers.
The transfer was made between the developer, a management company and a purchaser of
an individual unit.

Short-comings

(1) Content and form of plans to support issue of titles was not prescribed in legislation.
(2) No law that described what was individual property and what was common property and
this was left to the wording of the transfer.
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(3) Incorporation of a management company for the administration of the common services
was not mandatory.
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(4) A corporation incorporated under the Companies Act had stringent provisions to be met and
non-compliance could result in them being struck off leaving the unit owners with serious
consequences.
(5) Issuing titles to the flats led to a multiplicity of titles to the same land.

Origins of sectional property

• Banks and financiers resisted the existence of subleases, because they couldn’t see how one
could mortgage or charge a sublease. To get over this problem they came up with the
concept of a management company to be owner by e.g. apartment owners. Therefore the
reversion was taken care of by the management company registered like a company with
the sole objects of managing the head parcel itself and not the individual flats i.e. it would
actually own the reversion.
• The lessor would then give sub leases and transfer the revision or remainder of the term to
the management company, the individual property owners would own the management
company.

SECTIONAL PROPERTIES ACT, NO 21OF 1987

PURPOSE:
(1) Division of buildings into units owned by individual proprietors
(2) Common property to be owned by unit owners as tenants in common
(3) Use and management of units and common properties

The Act provides for:

(1) Requirements for sectional plans intended to support unit titles.
(2) Registration of sectional plans under the Registered Lands Act (for freeholds and leaseholds
with a reversion of 45 years and more). Unit must be 2 or more. A certificate of sectional
property is issued for each unit.
(3) Register for title in common property is closed.
(4) Substantive law governing the rights of the parties
(5) A corporation whose members are the owners of the units is formed on registration of the
plan. The provisions of the Companies Act do not apply.
(6) Corporation has a management board which appoints a manager to manage the common
property.
(7) Applies to any land registered under any Act but titles of land registered under GLA and RTA
would be deemed to be registered under RLA.

PURCHASE AGREEMENT
Section 46 SPA imposes duty on developer to deliver the following documents before selling
or agreeing to sell:
(a) Sale agreement
(b) By-laws or proposed by-laws
(c) Management agreement or proposed management agreement
(d) Recreational agreement or proposed recreational agreement
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(e) Lease of property/title, certificate of sectional property

(f) Any charge that affects the property
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(g) Sectional plan or proposed sectional plan

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46. Sale of residential unit.

(1) A developer shall not sell or agree to sell a unit or proposed unit unless he has delivered to a
purchaser a copy of –
(a) the purchase agreement;
(b) the by-laws or proposed by-laws;
(c) any management agreement or proposed management agreement;
(d) any recreational agreement or proposed recreational agreement;
(e) the lease of the parcel, if the parcel on which the unit is located is held under a lease and
the certificate of sectional property in respect of the unit or proposed unit which has
been or will be issued under section 5 (1) (c);
(f) any charge that affects or proposed charge that will affect the title to the unit or
proposed unit or, in respect of that charge or proposed charge a notice prescribed under
subsection (2); and
(g) the sectional plan or proposed sectional plan.
(2) A developer shall deliver to the purchaser in respect of a charge or proposed charge a written
notice stating –
(a) the maximum principal amount available under the charge;
(b) the maximum monthly payment that may be paid under the charge;
(c) the amortization period;
(d) the term;
(e) the interest rate or the formula, if any, for determining the interest rate; and
(f) the prepayment privileges, if any.
(3) Subject to subsection (4), a purchaser of a unit under this section may, without incurring any
liability for doing so, rescind the purchase agreement within ten days from the date the purchase
agreement was executed by the parties to it.
(4) A purchaser may not rescind the purchase agreement under subsection (3) if all the documents
required to be delivered to the purchaser under subsection (2) have been delivered to the
purchaser not less than ten days prior to the execution of the purchase agreement by the parties
to it.
(5) If a purchase agreement is rescinded under subsection (3) the developer shall, within ten days
from his receipt of a written notice by the purchaser of the rescission, return to the purchaser all
of the money paid in respect of the purchase of the unit.

AGREEMENT FOR SALE CONTENTS

The Format of the Purchase Agreement is stipulated under Section 47 of the SPA.

A) A notification that is at least as prominent as the rest of the contents of the purchase
agreement and that is printed in red ink on the outside front cover or on the first page of the
purchase agreement stating as follows

“The purchaser may, without incurring any liability for doing so, rescind this agreement within
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ten days of its execution by the parties to it unless all of the documents required to be delivered
to the purchaser under section 46 of the Sectional Properties Act, 1987 have been delivered to
the purchaser not less than ten days prior to the execution of this agreement by the parties to it.”
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B) A description drawing or photograph showing:

i. The interior finishing of all major improvements to the common property located within a
building.
ii. Recreational facilities, equipment and other amenities to be used by the unit owner
iii. Location of roadways, walkway, fences, parking areas and recreational facilities
iv. Landscaping
v. Exterior finishing

C) The amount or estimated amount of monthly unit contributions in respect of a residential

unit D. The unit factor of the unit and the basis factor apportionment for all units comprised
in the plan.

47. Contents of purchase agreement.

Every developer who enters into a purchase agreement shall include in the purchase agreement the
following –
(a) a notification that is at lease as prominent as the rest of the contents of the purchase
agreement and that is printed in red ink on the outside front cover or on the first page of
the purchase agreement stating as follows –
“The purchaser may, without incurring any liability for doing so, rescind this agreement
within ten days of its execution by the parties to it unless all of the documents required to
be delivered to the purchaser under section 46 of the Sectional Properties Act, 1987 have
been delivered to the purchaser not less than ten days prior to the execution of this
agreement by the parties to it.”
(b) a description, drawing or photograph showing
i. the interior finishing of all major improvements to the common property located
within a building;
ii. the recreational facilities, equipment and other amenities to be used by the
person residing in the residential units;
iii. the equipment to be used for the maintenance of the common property;
iv. the location of roadways, walkway, fences, paing areas and recreational facilities;
v. the landscaping; and
vi. the exterior finishing of the building as it will exist when the developer has
fulfilled his obligations under the purchase agreements;
(c) the amount or estimated amount of the monthly unit contributions in respect of a
residential unit; and
(d) the unit factor of the unit and the basis of unit factor apportionment for all units
comprised in the sectional plan

SECTIONAL PROPERTIES

The Sectional Properties Act was enacted in 1987. The commencement date of the statute
was 1st April 1990.
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The pre-amble to the Act describes the Act as one providing for the division of buildings into
units to be owned by individual proprietors and common property to be owned by proprietors
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of the units as tenants in common and to provide for the use and management of the units
and common property and for connected purposes.
The Sectional Properties Act 1987 was essentially enacted to facilitate the sale and purchase
of flats and apartments by- way of sectional titles.
The Sectional properties Act has been operationalised and over 7000 titles issued for Nyayo
Estate in Nairobi.
Key characteristic of the Act include separate ownership of flats and apartments, co-
ownership of common property by all flat/ apartment owners.
i. The substantive law pursuant which title is issued is RLA.
ii. Where the land the subject of the proposed development is owned under RTA, GLA
or other systems of registration, there must first be a conversion of title to RLA.
Sections 4 and 5 of the Act are key as they relate to the registration of sectional plans in
respect of the units. The Sectional plan is the architectural drawing outlining the units and
the proportional common area to which each unit related to.

4. Sub-division of buildings into units.

(1) An existing or planned structure may be designated a building containing a unit or part of a unit
or divided into two or more units by the registration of a sectional plan under this Act.
(2) The Registrar shall not register a sectional plan unless –
(a) The sectional plan describes two or more units in it; and
(b) The sectional plan is presented for registration in quadruplicate.
(3) For the purposes of the Registered Land Act, a sectional plan shall be deemed on registration to
be embodied in the register.

5. Registration of sectional plans.

(1) On the registration of a sectional plan the Registrar –

(a) shall close the register of the parcel described in it; and
(b) shall open a separate register for each unit described in the plan; and
(c) shall on the payment of the prescribed fee, issue title deed for sectional property in
respect of each unit.
(2) Any interest affecting the parcel which is noted on the register closed under paragraph
(a) of the subsection (1) shall be endorsed, on the registers opened under paragraph
(b) and on the title deed for sectional property issued under paragraph
(c) of that subsection.
(3) No more than one unit may be referred to in one register and no other land, except the share in
the common property apportioned to the owner of that unit in accordance with section 6 (2)
may be referred to in the same register.
(4) Any interest affecting an individual unit which is part of a sectional plan registered under section
4 (1) and not endorsed pursuant to subsection (2) of this section shall be endorsed on –
(a) the register of the unit opened under paragraph
(b) of subsection (1); and (b) the title deed for sectional property issued in respect of the
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unit under paragraph

(c) of subsection (1).
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the title to a unit comprised in the plan shall, with effect from the date of the registration of the
sectional plan, be deemed to be issued under the Registered Land Act.
(6) After a register for a unit is opened pursuant to subsection (1) the unit may devolve or be
transferred, leased, charged or otherwise dealt with in the same manner and form as land held
under the Registered Land Act and the provisions of that Act shall apply to those dealings in so
far as those provisions do not conflict with this Act or regulations made thereunder.

On the registration of the sectional plan the Registrar shall close the Register of the parcel
described in it and shall open a separate register for each unit described in the plan.
The Registrar of Lands on the payment of the prescribed fees issues a certificate of sectional
title in respect of each unit.

SECTIONAL TITLES

A Sectional Title may devolve or be transferred, leased or charged or otherwise dealt with in
the same manner as any other land registered under the RLA.
The SPA at Section 17 provides for the automatic constitution of a Corporation once a
Sectional Plan is registered Under Section 4 of the Act.

17. Establishment of a Corporation.

(1) On the registration of a sectional plan there shall be constituted a Corporation under the name
“The Owners, Sectional Plan No. ............... (the number to be specified being the number given
to the plan of registration).
(2) A Corporation shall consist of all those persons - (a) who are the owners of units in the parcel to
which the sectional plan relates; or (b) who are entitled to the parcel when the sectional
arrangement is terminated under this Act.
(3) The Corporation shall have perpetual succession and a common seal.
(4) The Corporation shall be regulated in accordance with this Act and the by-laws specified in the
regulations shall subject thereto, have effect in relation to the corporation and its board.
(5) The provisions of the Companies Act shall not apply to the Corporation.

The provisions of the Companies Act Cap 486 do not apply to the Corporation.
The Corporation is designated a name, e.g. ‘The owners of Sectional Plan Number……..’
The Corporation has perpetual Succession and a Common Seal.
The duties of the Corporation are described at Section 20 of the Act and these include
carrying out any duties imposed on it by the by-laws, insurance of the building, keeping
building and common property in a good state of repair, compliance with statutory
obligations, management of service charge etc.

20. Duties of the corporation.

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(1) The Corporation shall –

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(a) subject to this Act, carry out any duties imposed on it by the by-laws;

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(b) unless by unanimous resolution all the proprietors otherwise resolve, insure and keep
insured buildings and other improvements on the parcel against fire;
(c) effect such other insurance as it is required by law to effect or as it may consider
expedient;
(d) pay the premiums in respect of any policies of insurance effected by it;
(e) keep the common property in a state of good repair;
(f) comply with any notice or order duly served on it by any competent local authority or
public body requiring repairs to, or work to be performed in respect of, the land or any
building or improvements thereon;
(g) subject to this Act, control, manage, and administer the common property and do all
things reasonably necessary for the enforcement of the by-laws;
(h) do all things reasonably necessary for the enforcement of any lease or licence under
which the land is held;
(i) do all things reasonably necessary for the enforcement of any contract of insurance
entered into by it under this section.
(2) The Corporation shall –
(a) establish and maintain a fund for administrative expenses sufficient, in the opinion of
the Corporation, for the control, management, and administration of the common
property, and for the payment of any insurance premiums, rent, and the discharge of
any other obligation of the Corporation;
(b) determine from time to time the amounts to be paid for the purposes aforesaid;
(c) raise amounts so determined by levying contributions on the proprietors in proportion
to the unit entitlement of their respective units.
(3) The Corporation may, pursuant to a resolution of the proprietors, distribute any money or
personal property in its possession and surplus to its current requirements among the
proprietors for the time being according to their unit entitlements.
(4) For the purposes of effecting any policy of insurance under the provisions of subsection (1) the
Corporation shall be deemed to have an insurable interest on all the buildings and other
improvements on the parcel.
(5) Any policy of insurance authorized by this section and effected by the Corporation in respect of
any buildings or other improvements on the parcel shall not be liable to be brought into
contribution with any other policy, save another policy authorized by this section in respect of
the same buildings or improvements.

Sale of residential Units under the SPA 1987 will be by way of purchase agreement. Section
46 of the Act outlines the documents that must be delivered to a potential purchaser by the
developer among these the by- laws or proposed by- laws of the corporation, any
management agreement or proposed management agreement, any recreational agreement
or proposed recreational agreement, the lease of the parcel, or certificate of sectional title
for the unit, any charge that affects or proposed charge that will affect the title to the unit or
proposed unit, the sectional plan, etc.

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Unlike in the sublease regime, the developer must deliver to the purchaser at least 10 days
before the execution of the purchase agreement a description, drawing or photograph
showing the interior finishing’s of the building, any recreational facilities to be used by
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persons residing in the units, the location of roadways, walkways, fences, parking areas,

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landscaping, the exterior finishing’s of the buildings as it will exist when the developer has
fulfilled his obligations under the purchase agreement.
The purchaser must also be informed of the estimated amount of service charge and his/her
unit factor apportionment in respect of the unit.
Section 48 of the SPA 1987 provides that all payments by a purchaser to the developer must
be held in trust.

48. Payment held in trust.

(1) A developer or a person acting on his behalf shall hold in trust all the money paid by a purchaser
under a purchase agreement other than rents, security deposits or mortgage advances; and - (a)
if the improvements to the unit and the common property are substantially completed, the
money may be paid to the developer on delivery of the title documents to the purchaser; or (b) if
the improvements to the unit are substantially completed but the improvements to the common
property are not substantially completed - (i) not more than fifty percent of that money less the
interest earned on it may be paid to the developer on delivery of the title document to the
purchaser; and (ii) on the improvements to the common property being substantially completed,
the balance of that money and all the interest earned on the total amount held in trust in respect
of that purchase agreement may be paid to the developer.
(2) The developer or a person acting on his behalf who receives money that is to be held in trust
under subsection (1) shall forthwith deposit the money into an interest earning trust account
maintained in a bank or financial institution licensed under the Banking Act.
(3) If money is being held in trust under subsection (1) and the purchaser of the unit takes
possession of or occupies the unit prior to receiving the title document, the interest earned on
that money from the day the purchaser takes possession or occupies the unit to the day he
receives the title document shall be applied against the purchase price of the unit.
(4) Subject to section (3), the developer is entitled to the interest earned on money held in trust
under this section.
(5) For the purposes of this section, improvements to the unit or the common property, as the case
may be, are deemed to be substantially completed when the improvements are ready for use or
are being used for the purpose intended.
(6) This section does not apply in respect of money paid to a developer or to a person acting on
behalf of a developer, under a purchase agreement, if that money is held under the provisions of
a plan, agreement, scheme or arrangement approved by the Minister that provides for the
receipt, handling and disbursing of all or a portion of that money or indemnities against loss of all
or a portion of that money or both.
(7) The provisions of this section shall not apply if the purchaser does not perform his obligations
under the purchase agreement.

Section 54 (3) & (4)LRA registration of sectional properties shall be as per the Sectional
Properties Act No 27 of 1997
Section 4- Sectional plan to be presented for registration if it describes 2 or more units
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Section 5- after registration of sectional plan, Registrar closes the register of the parcel and
opens a separate register for each unit and issues a title deed for each unit. The Titles are
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deemed to have been registered under LRA. The titles can be transferred, leased, charged
etc as though held under LRA.
Common property held by owners of units as tenants in common as shares proportionate to
the units they own. The ownership of shares is noted in the register.
The sectional plan can only be registered on a freehold or leasehold property with a
minimum balance of 45 years reversion.

ELEMENTS OF A SECTIONAL OWNERSHIP

The Common Property

We have units within the common property
We have sections within the units
The right to exclusive use of certain common property

Sectional Units Management (Corporation);

The common property is managed through the corporation

The sectional units are managed through a management agreement
Sale of unit is by way of purchase agreement and all documents required to be delivered to
purchaser (ie purchase agreement, by-laws, management, recreational agreement, lease of
parcel and sectional title, charge(if any) to be delivered 10 days before execution of
agreement
Developer holds purchase money in trust. 50% payable on delivery of sectional title to
purchaser and balance upon completion of improvements( s 48 SPA).
S 17 SPA- on registration of a sectional plan a corporation under the name “the owners,
Sectional Plan No.....”
Members of the corporation are the unit owners
Corporation has perpetual succession and a common seal
Capable of being sued and suing
Corporation is regulated in accordance with SPA and its by-laws and not Companies Act
Duties of corporation
i. Insure property and pay premiums and enforce the insurance contract
ii. Keep common property in good state of repair
iii. Comply with any notice or order of local authority or public body requiring repairs or
work on the property
iv. Control manage and administer the common property
v. Creation and enforcement of by-laws
The corporation is run through a board of management

Who controls the sectional corporation?

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The corporation is controlled by the institutional manager who must be a lawyer accountant
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or estate agent registered under the Estate Agents Act- S29 SPA

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29. Appointment of institutional manager.

(1) The board shall, not more than twenty-eight days after its election, appoint an institutional
manager for the management of the units, the movable and immovable property of the
Corporation and the common property.
(2) The person appointed as an institutional manager under subsection (1) shall be –
(a) an accountant registered under the Accountants Act who has held a practicing certificate
for a period of not less than five years or an accountancy firm that has had an office in
Kenya for period of not less than five years; or
(b) a person registered as an estate agent under the Estate Agents Act; or
(c) an advocate.
(3) An institutional manager shall perform such functions as may be delegated to him by the
Corporation.
(4) Where an institutional manager relinquishes his appointment for whatever reason the board
shall appoint another institutional manager within twenty days.
(5) The institutional manager shall - (a) be paid such remuneration as may be specified in the by-
laws; and (b) have such possession and use of the seal of the Corporation as is necessary to carry
out his functions under this Act.
(6) A local authority, a judgment creditor of the Corporation for an amount of not less than five
thousand shillings or any owner or person having a registered interest in or over the units
comprised in a sectional plan may apply to the tribunal for the appointment of an institutional
manager to replace an institutional manager apointed by the board under this section.
(7) An institutional manager appointed by the tribunal under subsection (6) shall hold office for a
period determined by the tribunal; and the dismissal of an institutional manager by the tribunal
terminates any contract between the Corporation and the institutional manager

Registration of Sectional Properties, Sec 54 LRA

The LRA Section 54 (3) - recognizes registration of interest in land under the SPA.
LRA Section 54(5)-registrar shall register long term leases and issue certificates of lease over
apartments, flats, maisonettes, townhouses or offices as long they are properly geo-
referenced and approved by the body charged with survey.

54. Registration of Leases.

(1) Upon the registration of a lease containing an agreement, express or implied, by the lessee that
the lessee shall not transfer, sub-let, charge or part with possession of any of the leased land
leased without the written consent of the lessor, the agreement shall be noted in the register of
the lease, and no dealing with the lease shall be registered until the consent of the lessor,
verified in accordance with this Act has been produced to the Registrar.
(2) The Registrar, upon receipt of adequate proof, may dispense with the consent of the lessor-
(a) where satisfactory evidence is given to the registrar and the Registrar is satisfied that the
lessor is dead and that there is no personal representative of the lessor; or
(b) if the Registrar considers that the consent of the lessor or the personal representative,
as the case may be, cannot be obtained or that it can only be obtained with difficulty or
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at an unreasonable expense and shall, after making such enquiries as the Registrar may
consider necessary in the circumstances, record on the document his or her reasons for
dispensing with the consent and note as such in the register.
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out in the manner prescribed under that Act. No. 21 of 1987.

(4) The land register maintained under section 7 of this Act shall be deemed to be the land register
for purposes of the Sectional Properties Act.
(5) The Registrar shall register long-term leases and issue certificates of lease over apartments, flats,
maisonettes, townhouses or offices having the effect of conferring ownership, if the property
comprised is properly geo-referenced and approved be responsible for the survey of land.

Termination of Sectional Property

Section 55 SPA by:

i. Unanimous resolution
ii. Application to court by corporation, owner, a registered chargee of a unit or
purchaser

Court declares the termination of sectional status if in the interest of all stakeholders.
The Corporation files a notice with Registrar in prescribed form who registers the notice, the
unit owners become entitled to the parcel as tenants in common in shares proportionate to
the unit factors of their respective units.
55. Termination of sectional property.
(1) The sectional status of a building may be terminated by a unanimous resolution.
(2) An application to terminate the sectional status of a building may be made to the Court by the
Corporation, an owner, a registered chargee of a unit or a purchaser under an agreement for sale
of a unit.
(3) On an application under this section, if the Court is satisfied that having regard to the rights and
interests of the owners as a whole or the registered chargee or purchaser under agreement for
sale of units, it is just and equitable that the sectional status of the building should be
terminated, the Court may make a declaration to that effect.
(4) When a declaration has been made pursuant to subsection (3) the Court may by order impose
any conditions and give any directions, including directions for the payment of money, that it
thinks fit for the purpose of adjusting as between the Corporation and the owners and as
amongst the owners themselves the effect of the declaration.
(5) On an application to the Court under this section an insurer who has effected insurance on the
building or a part of it, being insurance against destruction of units or damage to the building,
has the right to appear in person or by agent or by an advocate.

Effect of termination

On termination the corporation shall file with the registrar a notice of the termination in the
prescribed form.
On receipt of the notice, the registrar shall make a notification in respect of the notice on
the sectional plan in the manner prescribed by the regulations and on the notification being
made, the owners of the units in the plan are entitled to the parcel as tenants in common in
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shares proportional to the unit factors of their respective units.

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CONVERSION OF A TITLE TO A SECTIONALPROPERTY TITLE

The Sectional Properties Act was enacted in 1990 to facilitate transfer of flats through
mortgage finance.
The lenders objected to subleases as security because:-
(1) The titles were dependent on the head lease by the Government or Head Lessor.
Therefore, there was some uncertainty as to whether the lease would be extended,
if someone defaulted and the Bank had to sell, it would be hard to get a buyer and
extension wasn’t guaranteed.
(2) Even where extension was guaranteed, the terms of extension were unknown and
uncertain therefore not good security
(3) There was a distinct possibility that the head lessor would fail to apply for extension
of the lease
(4) Also argued that subsistence of the sublease dependent on head lessor serving his
obligations.

Nevertheless, a grant was essentially the same as a lease, so this argument did not hold
much weight. The misconception was based on looking at a sublease (not as title but) as a
lease!
These arguments led to the adoption of the Australian condominium legislation on
subleases.
The effects were:
(a) The RLA became the substantive law and a sectional title could be issued to an
owner of a flat which was registered under the Sectional Properties Act. If property
not under RLA, you would have to convert it to RLA. Flats owned under the Sectional
Properties Act have titles issued which are equivalent to grants. They are issued to
each owner of a unit.
(b) Corporate bodies are also established under the Sectional Properties Act similar to a
company recognised under the Companies Act BUT with no registration formalities.
It is a corporate body and has some liability. The moment a sectional plan is
registered corporate bodies are constituted. A sectional plan is the document
prepared by a qualified architect or surveyor which defines or describes in a graphic
form the units constituting the sectional property. S.4 of the Sectional Properties Act
provides for the process of preparing a title which commences with the registration
of the plan. Upon such registration the parcel of land register on which the property
lies is closed and a separate register for each unit opened. The corporate entity
established upon registration is identified by the name which name refers to the
number of the sectional plan e.g. Sectional Plan No.22

HOW TO CREATE A SECTIONAL PROPERTY TITLE

This is done by preparing a sectional plan done by a surveyor and upon approval of the
sectional plan by the local authority where it is situate, it is registered by the registrar of
lands and not of titles.
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o Under S4 of the Act, the plan must describe two or more units that the property will
be divided into. It must delineate the boundary of each individual unit and reveal the
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o The sectional plan must be presented in quadruplicate

o For purposes of the RLA a sectional plan shall be deemed on registration to be
embodied in the register.

Upon registration the register of the original piece of land is closed and a separate register is
opened for each unit which will contain a description of that unit, the share apportioned of
the owner of that unit any other encumbrance attached to that unit or originally attached to
that parcel of land.
Each unit will then be issued a certificate of sectional title, which is as good as any title.

Reason for shares

The reason for shares is because a corporation will be formed under the Act.
The name of the company is usually the owners sectional land number [registered number
of sectional plan]’.
Because the corporation comes into existence immediately, what guides you is the by-laws
the shareholders draw on how to run the estate.

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SUB-LEASES

CONCEPT OF SUB-LEASE

The sublease concept applies mostly to ownership of high –rise apartments on the same parcel
of land. In Kenya this phenomenon is hardly 25 years.
The sublease concept is based on the abstract reasoning that each floor of apartment block is a
separate parcel capable of subsisting and thus alienation.
The sublease concept is also based on the reasoning that land supports or can support various
estates and interests capable of ownership and alienation.
Several people can own various interests in the same piece of land simultaneously.
Under the sub-lease concept developers issue leasehold interests for the remainder of their
terms in the land.
The sublease is registered against the Title of the developer for the parcel of land on which the
building rests or is situate. Once the lease is registered it then becomes the ‘title’ for the
apartment or flat.
Most of these leasehold interests are issued in respect of government or local authority leases.
The buyer of the flat or apartment acquires a lease from the developer who is a normally a
lessee of the government or a local government authority.
The developer must however transfer its right to the reversionary interest in the property to a
management company in which all the tenants in the development have shares.
The management company is normally incorporated by the developer before the
commencement of the sale and purchase process of the units.
The management company owns the reversionary interests in the property and also the
common property.
The role of the management company includes day to day management of the common
property in addition to taking charge of statutory obligations for which the company may be
liable such as payment of land rents and land rates once all leases have been registered and
tenants have taken possession of the units.
The minimum number of years for enjoyment of the un- expired interest preferred for subleases
is at least fifty years.
Another way of owning flats
Developer of leasehold or freehold property subleases the units for a shorter term than the
lease and retains the reversionary interest.
Management company is incorporated under the Companies Act to manage the estate. It
purchases the reversionary interest from the developer and the unit owners are shareholders
The flat sold must be properly described eg flat no. ..... Built on LR No.....together with
ownership of common areas
Monthly service charge is collected for payment of rates, rent, maintenance of the common
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areas.
Preferred minimum number of years of enjoyment of unexpired interest is 50 years

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Restrictions:
i. No remodelling without consent of the management company
ii. Use of flat
iii. Fixing aerials
iv. Hanging of washings
v. Obstruction at car parks
vi. Garbage dumping
vii. Pets
viii. Assigning, subletting, transfer or any form of parting with possession without consent of
lessor

Definition of a Sub-Lease

These are transfers or conveyances in their own rights.

A sublease is basically a lease by a lessee to a third party conveying some or all of the
leased property for a shorter term than that of the lessee himself.
It is occasionally referred to as an underlease or even a lease. In the latter case, it will
happen when dealing with freehold property e.g. 999 years lease and given for 900
years. Subleases have been in existence in Kenya since the late 1970s.

Characteristics of a Sub-Lease
The term to be granted in the sublease will depend on the head-lease i.e. must be less
than the head lease.
There is a management company that owns the property (land) where the sublease is
created. This company is registered under the Companies Act Cap 486. Its purpose
includes inter alia:
i. managing the estate where this sublease exists
ii. acquiring the reversionary interest where the subleases lie. It is the
management company that will then negotiate an extension of the lease.
The owners of the sub-leases are entitled to a share of the management company.
Therefore, the sub-lessees own the reversionary interest itself by getting a share
certificate of the management company.
The reversionary interest will vest in the management company.
The building/architectural or site plans will be annexed to the sub-lease, properly
marked
Insist that the sub-lease has a clause/covenant that upon expiry of the term, the
management company or whoever is holding a reversionary interest will also give a
similar term automatically.

Distinctive features of Sectional Properties v Subleases –Old Regime

(1) Operative law in sectional properties is RLA while in subleases it could be RLA, RTA or GLA
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(2) Under the Sectional Properties Act the title is a certificate of Sectional Title issued under RLA
in other subleases, the title is the lease itself
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(3) The corporate entity is registered automatically under s.17 of the Sectional Properties Act,
while in sub-leases; the corporate entity is incorporated under the Companies Act as a
limited liability company.
(4) The statutory framework regarding conveyancing in the Sectional Properties Act is the same
as those under the RLA as well as the applicable legislation under Sectional Properties Act.
For subleases, the form will either take the general form under RTA, GLA/LTA e.g. if GLA -
assignment, if RTA – transfer
(5) The generally accepted minimum term of subleases is 50 years. In the case of sectional
properties, the property will only be converted to RLA from RTA, GLA or LTA if it is more than
45 years

Distinction between sectional titles and sub-leases is:

In subleases, management performs all duties but in sectional titles a corporation will
perform the functions of the management company and will not be incorporated or
registered under law. It is automatically constituted after issuance of sectional title. It has
the same function as the management company.

SECTIONAL TITLE SUB-LEASE

On registration of sectional plan the register of Sublease registered and issuance of titles must
the parcel is closed and separate registers for comply with section 54(5) of LRA in terms of geo-
each unit is opened and title deeds issues referencing

No title issued for common property but upon Title for common property issued and may lead to
registration of plan a register is opened for the duplicity of titles
common property for recording matters such as
schedule of unit owners etc

Common property defined and owned as part of Common property not defined and owned by unit
the unit in the title owners as shareholders in the management company

Less formalities in the formation of the Management company formed under the Companies
corporate body(on registration of plan). Act. It can be deregistered

Plans used for registration are prescribed Plan not prescribed

SPA protects the purchase process- eg time of No such protection of the purchase process
delivery of agreements, the holding of the
deposit by vendor as stakeholder etc

SIMILARITIES BETWEEN SECTIONAL TITLE AND SUB-LEASE

(1) They are both dependant on the head-lease

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(2) They depend on a management company

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TRANSFER OF REVERSIONARY INTEREST

So for instance a bank had an RLA title that was transferred to a developer.
Each unit (represented by a lease) was registered against title.
44 leases had been registered against title but two had not been registered.
There was a clause in the agreement between the developer and the management
committee (transferee) to transfer the rights and interests in the reversionary interest after
all the leases had been registered against title. This is a very important clause that should be
included in the transfer (between the developer and the management committee). The
reversionary interest is normally sold for an amount say Kshs. 50,000 for every unit.
The above clause is important because it requires the owners of the subleases (the various
units) to pay up for the subleases before they are registered against the main title. So that all
the sublease holders are required to pay up before the reversionary interest is transferred to
the management committee.
Therefore the reversionary interest would not be effected until all the leases have been
registered against the main title.
Transfer of reversionary interest is between the developer and the management company.
Draw a schedule of all the leases (that have been given the I.R no- you can get this from the
head title) and there is an execution clause in the transfer-since it is an RLA transfer.
For leases-you have to apply for an extension of the lease 6 months to the expiry of the
lease.
There is what is known as a ‘Takeover meeting’ where all the documents relating to the
head lease are transferred to the unit owners. Also cheque books and monetary matters
relating to the property are discussed.
One of the documents that you should hand over to your client is the original holder is the
main title (the one stamped all over). This is the title he gets after being issued with the I.R
number after registration of the sublease.
The client is also issued with a shareholder certificate by the registrar of companies.
You must always ensure that the management committee gets hold of the main title.
The sublease in a sectional property is described by the architectural floor plan.

THE PROCESS

(1) Transfer takes place after Registration of ALL Leases

(2) It’s a Transfer as any other – Ordinary RTA Transfer. It could also be an RLA Transfer.
Transfer is between Developer and Management Company in which all Tenants (Unit
Owners have Shares).
(3) Parts of the Transfer will include ego. Transferor has caused to be erected (24) Residential
Apartments Lawns, Swimming Pools, Gardens and other convinces details of which are set
out in the schedule (hereinafter referred to as the “Leases.”
(4) It was a condition in all the 24 leases that the Transferor would Transfer to the Transferee all
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its right, title and interest in the “Reversionary Interest held by it in the property after
registration of all the leases”.
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(5) “As all the leases have now been registered the Transferor has agreed with the Transferee
for the Transfer to the Transferee
Tran of the Property at the Price of Kshs.xxxx
(6) There must be a Transfer clause “NOW THIS INSTRUMENT OF TRANSFER OF REVERSIONARY
INTEREST WITNESSETH”.. that in pursuance of the promises and in consideration
consideratio of the sum
of Kshs.xxxx paid by the Transferee on or before the execution hereof ( the receipt of which
sum the Transferor hereby acknowledges) the Transferor HEREBY TRANSFERS UNTO to the
Transferee ALL its rights, title and interest in the property Subject however to the Acts,
Special Conditions and Other Matters contained or refereed to in the Memorandum
endorsed hereon and to the lease.

(7) Schedule – will outline ALL LEASES e.g

i. Lease of Apartment A1 I.R No. ….??

ii. Lease of Apartment A2 I.R No. ….??
iii. Lease of Apartment A3 I.R No. …..??

(8) Lastly there willll be an execution clause IN WITNESS WHEREOF the parties hereto have
executed this transfer OF REVERSIONARY INTEREST the day and year herein before written

Signed by the Transferor )

Picture

ID Number …………………….

PIN ……………………………

Signature …………………….

Signed by the Transferee )

)
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Picture

ID Number …………………….

PIN ……………………………

Signature …………………….

(9) The Transfer of reversionary interest must be sta

stamped and registered against title.

(10) The Officials of the Management Company must take custody of the original title.

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SAMPLE TRANSFER OF REVERSIONARY INTEREST

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NOTES ON ASSIGNMENT OF LEASES

This is the relevant transfer document to be drawn if a flat/apartment or property

constituting leasehold interest under the sublease regime is being disposed.
By the assignment of lease the vendor transfers unto the purchaser the entire unexpired
remainder of the leasehold term.
Parties include:

a) Vendor who by virtue of a lease (holding leasehold interest) is vested with capacity to sell
(assign his interest) for the residue of the term of the years contained in the lease.

b) Purchaser – person intending to purchase interest.

c) The developer – who is or was initially registered as proprietor as lessee from the
Government. The developer is normally the party that will have facilitated the development
of the units.

d) The manager – this constitutes the management company in which the intending purchaser
must acquire shares or shareholding representing an interest in-order appurtenant to the
unit in order for him/her to be entitled to a reversion together with the other tenants.

i. The developer and the manager must consent to the transaction.

ii. The instrument of assignment of lease must provide that the vendor as beneficial
owner in consideration of a certain amount of money( amount for which the flat is
being sold) to be paid by the purchaser with the consent of the manager and the
developer transfers unto the purchaser ALL his right, title and interest in the
property comprised in the lease.

e) The instrument of assignment must then be signed by the parties.

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LECTURE 10: FRIDAY 29 JULY-12 AUGUST 2016- MORNING SESSION (LECTURE

HALL A)

TOPIC 10: LEASES AND LINCENCES

The student should be able to make and obtained all searches and consents required by law
and good practice.
The student should be able to draft, peruse and advise on a lease reflecting the agreement
between lessor and lessee and protecting their respective interests. The student should be
able to arrange for the lease to be executed and (if necessary) stamped and registered,
according to law.

Definition of a Lease

Under the Old Regime

S.3 of the RLA defines a lease as a grant with or without consideration by the proprietor of
land to another person to the exclusive possession of that land.
S.105 of the ITPA states that a lease is a transfer of a right to enjoy such property made for a
certain time or in perpetuity in consideration of a price paid or promised.
A lease entails a transfer or grant of a right or interest in property for a limited period of
time (RLA) or even in perpetuity (ITPA) Exclusive possession. Whoever is granting the right
excludes himself from interfering with lessee’s possession.

Under New Regime

Section 2 of the Land Act 2012 defines a Lease as

2-Lease
“lease” means the grant, with or without consideration, by the proprietor of land of the right to the
exclusive possession of his or her land, and includes the right so granted and the instrument granting it,
and also includes a sublease but does not include an agreement for lease;

“lessee” means a person to whom a lease is granted and includes a person who has accepted a transfer
or assignment of a lease;

“lessor” means a person by whom a lease is granted and includes a person who has accepted the
transfer or assignment of the reversion of a lease;

An owner of a property who does not wish to stay or occupy the land himself may grant
another person the right to occupy and use the property for a certain period in return for an
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agreed sum of money

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In Prudential Assurance Co. Ltd V London Residuary Body (1992)AC 286 it was defined as “a
contract for the exclusive possession and profit of land for some determinate time”

Types of Leases

Under the Land Act 2012 there are two types (See Section 57and 58 of the Land Act)
namely
a) Periodic Lease
Term not specified and no provision is made for giving notice to terminate the tenancy (it is
deemed to be for the period by reference to which rent is payable)
Term is from week to week, month to month, year to year or any other periodic basis for
rent payment in relation to agricultural land it shall be for 6 months
Lessee remains in possession with the consent of lessor after expiry of the term of the lease
unless there is an express or implied term agreed. The conditions and term of expired lease
apply.
No agreement in writing but there is occupation and payment of rent.
May be terminated by giving notice whose length is not less than its period and shall expire
on the day when rent is payable. S 57(4)
Does the above provision conflict with S 4 of cap 301
S28(f) LRA periodic tenancies are overriding interest
Leases or agreements for leases for a term not exceeding two years, periodic tenancies and
indeterminate tenancies

57. Periodic leases.

(1) If in any lease—
(a) the term of the lease is not specified and no provision is made for the giving of notice to
terminate the tenancy, the lease shall be deemed to be a periodic lease;
(b) the term is from week to week, month to month, year to year or any other periodic
basis to which the rent is payable in relation to agricultural land the periodic lease shall
be for six months;
(c) the lessee remains in possession of land with the consent of the lessor after the term of
the lease has expired, then—
i. unless the lessor and lessee have agreed, expressly or by implication, that the
continuing possession shall be for some other period, the lease shall be
deemed to be a periodic one; and
ii. all the terms and conditions of the lease that are consistent with the provisions
of sub-paragraph (i) shall continue in force until the lease is terminated in
accordance with this section.
(2) If the owner of land permits the exclusive occupation of the land or any part of it by any person
at a rent but without any agreement in writing, that occupation shall be deemed to constitute a
periodic tenancy.
(3) The periodic tenancy contemplated in subsection (1) (a) shall be the period by reference to
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which the rent is payable.

(4) A periodic tenancy may be terminated by either party giving notice to the other, the length of
which shall be not less than the period of the tenancy and shall expire on one of the days on
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b) Short-Term Lease
Short term lease S58 LA
For a term of 2 years or less without an option for renewal
Periodic lease
No agreement in writing but there is occupation and payment of rent.
It may be made orally or in writing
A short term lease is not a registrable interest in land
A short term lease may also be made orally or in writing.

58. Short-term leases.

(1) A short term lease is a lease—
(a) made for a term of two years or less without an option for renewal ;
(b) that is a periodic lease; and
(c) to which section 57(2) applies.
(2) A short term lease may be made orally or in writing.
(3) A short term lease is not a registrable interest in land.

Other Differentiation

c) Fixed period
Where the term is certain

d) Periodic tenancies/leases
These run from one period to another. If rent is paid every year then it is yearly.
S106 ITPA and S46 RLA allows week to week tenancies.

e) Tenancies at will
These arise in the case of sale agreements, where before completion possession is given.
These can be terminated at any time by the lessor.
For monthly tenancies 15 days notice will be needed. And for annual tenancies 6 months
notice.

f) Tenancies at sufferance
These exist at any periodic lease if the lease is for 6 years and the tenant stays on then that
will be a tenant at sufferance.
This can be construed as a tenancy at will, but the distinction is on the way they are
terminated.

Definition of License

A licence is an affirmation by the proprietor of land which allows the licences to do some act
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in relation to the land which would not otherwise be a trespass.

The fact that a person acquires a right of possession to the exclusion of the landlord and all
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It may be that he obtains only a personal privilege of occupation in the form of a licence
which may be revoked in the shape of a licence which may be revoked according to the
express or implied terms of the agreement, as was the case in Runda coffee Estates v.
Ujagar Singh.
A licence cannot be assigned unless it is coupled with an interest e.g. Where A allows B to
enter his land to cut to timber sold by A to B.
Note a licence coupled with an interest cannot be revoked while the interest with which it is
coupled subsists.

TYPES OF LICENSES

1. Simple (or bare) licence

This is given gratuitously and is not coupled with any grant or interest.
It is revocable by the licensor at will.

2. Contractual licence (a licence for value)

This is an implied kind of licence e.g. where X buys a cinema ticket for Y so as to view a
performance.

ESSENTIALS OF A LEASE

See Street v Mountford [1985] AC 809

Street v Mountford [1985] AC 809

Lord Templeman at p.817 stated that for a lease to exist, an occupier must be granted exclusive
possession for a fixed or periodic term in consideration of a premium or periodical payments. The
essential ingredients of a lease therefore are:
1. There must be an occupier (constructive or actual)
2. There must be exclusive possession
3. That exclusive possession must be transferred or granted by the proprietor
4. The period of the lease must be certain
5. The premium or rental payment is a crucial term

Exclusive possession means:

a) Right to use property; and
b) Right to exclude anybody from leased premises including the Landlord (save where a notice given)

(1) Property and parties must be sufficiently identified

The land or part thereof must be defined

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Ratwani V Deganela(1956)17 EACA 37- for a lease to exist the land must be defined. In this
case the lessee was to share a shop and his portion was not defined.
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S56 LA gives power to lease whole or part of the land. If part of land is being leased it shall
be accompanied by a plan or other description which the registrar deems adequate to
identify the property.
There can be no lease unless the property is defined of capable of being defined.
See Heptulla Brothers Limited v. Jambha Jeshangbhai Thakore (trading as London
photographic Arts)-

Heptulla Brothers Limited v. Jambha Jeshangbhai Thakore (trading as London photographic Arts)-
Held that no tenancy was created by a certain document because the premises intended to be let could
never be ascertained with sufficient precision.

Parties must also be identified

(2) For a period certain or capable of being ascertained

Also known as certainty of duration
The period of the lease must be defined or capable of being defined.
The term must have a beginning and a certain end.
Term of years must be definite it must be for a specific period or for a period capable of
being ascertained.
If the lessee has a fixed term, he can underlet or sublet the whole or a portion of his leased
term.
S 56 LA the owner of land may lease the land or part of it to any person for a definite term or
for the life of the lessor or the lessee or for a period which though indefinite may be
determined by the lessor or lessee.
Avoid creating leases that have clauses for perpetual renewal.
Leases can either be in possession or commence at a future date.
S61 La A lease can be made to commence at a future date not being later than 21 years after
the date it is executed. If the term of a future lease is for more than 5 years it must be
registered.
A term made to come into effect at a passed date is called a lease in possession. A lease to
commence at some future date is called a reversionary lease
S 61 LA a lease may be made for a term to commence in future within 21 years from the
date of its execution otherwise it is void
If the date of commencement and the end of the lease are uncertain, the transaction is void.
See Lace v. Chandler

Lace v. Chandler
Held that an agreement to let a house for the “duration of the war” did not create an agreement to let
the house as there was want of certainty of the period intended lease.
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Termination by Lessee or Lessor

See Section 56 of the Land Act

56. Power to lease land.

Subject to the provisions of this Act, the owner of private land may—
(a) Lease that land or part of it to any person for a definite period or for the life of the lessor
or of the lessee or for a period which though indefinite, may be terminated by the lessor
or the lessee; and
(b) Subject the lease to any conditions that may be required by this Act or any other law or
that the lessor may impose.

Future Date

See Section 61 of Land Act

61. Future leases.

(1) For the avoidance of doubt, a lease of land may be made for a term to begin on a future date,
not being later than twenty-one years after the date on which the lease is executed.
(2) A future lease, which is expressed to be for a period of more than five years, shall be of no effect
unless and until it is, registered.

(3) Exclusive Possession

A tenant must acquire the right of possession to the exclusion of the landlord and all persons
claiming through the landlord.
Street v. Mountford, it was stated that in determining whether a tenancy has been granted,
the essential question was whether there had been the grant of a right to the exclusive
possession of the premises.
Where the landlord retains some control over the premises the this is not exclusive
possession

CHARACTERISTICS OF LEASES

A grantor of a lease is known as the lessor while the grantee is known as the lessee.
The words ‘lease’ and ‘tenancy’ denote the grant and are sometimes used interchangeably.
However the word tenancy has come to be used in reference to short term leases.
Under the Landlord and Tenant(shops, Hotels and Catering Establishments) Act Cap 301 a
tenancy is described as a tenancy created by a lease or under-lease, by an agreement for a
lease or under-lease by a tenancy agreement or by operation of law, and includes a sub-
tenancy but does not include any relationship between a mortgagor and mortgagee as such;
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APPLICATION OF PART VI OF LAND ACT 2012

SECTION 55 LA provides that unless otherwise provided in a lease instrument the provisions
of part VI of the Act shall apply to all leases, other than leases governed by legislation
relating to community land.
What does the above provision mean?
Lease agreement is based on freedom of contract
The provision enables parties to a lease to contract out of the provisions of the said part VI.

55. Application of this Part.

(1) Unless otherwise provided in a lease instrument, the provisions of this Part shall apply to all
leases, other than leases governed by legislation relating to community land.
(2) The parties to a lease made or coming into effect before the commencement of this Act may
agree, in writing, to adopt or incorporate any of the provisions of this Part into that lease and
any provisions adopted or incorporated shall, unless the agreement otherwise provides, become
a part of the lease and shall be enforceable in every respect, with effect from the date of the
agreement.
(3) In this Part, unless the context expressly or by implication renders it unfeasible, references to a
lease include a sub-lease.

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DISTINCTION BETWEEN A LEASE AND OTHER AGREEMENTS

UNDERSTANDING THE TERMINOLOGY

It is important to understand the terminology in respect of dealings with leases. This is best
explained by the following diagram

L 1 (Sale )

Grant

T 2 (Assignment)

Grant

S 3 (Assignment)

When a lease is brought into being, the transaction is known as a 'grant'. "
Thus, in the diagram, when the owner of the freehold (L) creates a lease in favour of the tenant
(T), this is said to the grant of that lease.
This lease is the head lease, because the only superior title above it is the freehold (also known
as the freehold reversion).
Just as the landlord is able to carve a lease out of his freehold, T can do the same and so, in turn,
when T grants a lease to S this is called the grant of a sub lease

Effect of this
There are now three legal estates in existence over the land- the freehold, the head lead and the
sub lease.
They can each be bought and sold in their own right; L can transfer freehold to 1, T can transfer
head-lease to 2 and S can transfer sub-leasehold to 3

Note that
the transfer of a leasehold is referred to as an assignment
A grant of a lease creates the lease for the first time [the document giving effect to this will be
the lease its self], whilst an assignment transfers the remainder of such a lease once it has been
created [the document giving effect to this will be a deed of assignment].
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If the term granted is equal or greater than the head lease, the transaction will be treated as
being an assignment of the tenant’s lease
It is common to find restrictions on a tenant’s freedom to assign or sublet. Check the terms of
the lease before any such transaction.
The sub-lease is not in privy of estate with the head lessor. It follows that, under the privity of
estate rules, the sublease can neither enforce covenants in the head lease, nor be sued for
breach of them.

A) Lease and Assignment

In a lease only a term of years is granted to the lessee and the lessor has a right of
reversion after the expiration of the term granted.
An assignment conveys or assigns the entire leasehold interest to the purchaser and
the vendor has no right of reversion. The vendor can only assign the unexpired
residue of his term.
B) Lease and Under-Lease
A lease is a direct relationship between the lessor and the lessee.
An under-lease anticipates the existence of a head-lessor.
The under-lessor is a tenant of the head-lessor

C) Lease and Licences

A license is a relationship whereby the licensee is granted a right to enter into or use the
premises without becoming entitled to exclusive possession. A licensee has no interest in
the premises but he can exclude the whole world from the premises except the licensor
S2 LA defines a license as permission given by the commission (for public land) and
proprietor (for private land) allowing the licensee to do some act in relation to the land
which would otherwise be a trespass but does not include an easement or profit.
Exclusive possession is the central and indispensable feature of a lease. The lesser must
acquire a right of possession of the property to the exclusion of the lessor. If the lessor visits
the property without lawful authority (notice must be given)he can be sued for trespass
Possession alone does not result in a lease. If it is not exclusive then a license is created. The
exclusiveness of possession also depends on the degree of control.
See the following three Cases

Desai V Cooper(1950)214 KLR 32-

The defendants did not have keys to the front door of a shop and could only access it from the back.
They could not enter the front when they pleased but had to go to their portion through the plaintiff’s
portion. The plaintiff sought to recover the portion occupied by the defendants. The Court held that
even though the defendants had exclusive use of a portion of the premises, they did not have exclusive
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possession and were licensees not tenants.

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Hecht V Morgan(19957) EA 741-

‘paying guest’ . The respondent lodged a complaint under the Central Rent Tribunal Board against his
landlord. The tribunal had to decide whether it had a jurisdiction (only if it was a lease). The respondent
proved that he had exclusive possession and the court of appeal held in his favour

Halsbury’s Laws of England Volume XX page 9(2 ed.)

...a grant under which the grantee takes only the right to use the premises without exclusive possession
operates as a license, regard must be had to the substance of the agreement. If the effect of the
instrument is to give the holder, the exclusive right of occupation of land though subject to certain
reservations and a restriction of the purposes for which it may be used, it is a lease. If the contract is
merely for the use of the property in a certain way and on certain terms while it remains in the
possession and control of the owner, it is a licence. To give exclusive possession there need not be
express words to that effect, it is sufficient if the nature of acts to be done by the grantee require that
he should have exclusive possession....

(1) The main difference is there is no exclusive possession in the case of a licence.
(2) If the interest is created and transferred then it cannot be a licence but a lease.
(3) Whether an agreement is a lease or licence depends on the intention of the parties and the
circumstances of each case, including the nature of the suit premises and the terms of the
agreement. A transaction described as a licence could be a tenancy, depending on the intention
of the parties and surrounding circumstances- Hecht v.Morgan
(4) In Facchini v. Bryson Denning distinguished a lease and licence as follows- in all cases where an
occupier has been held to be a licensee there has been something in the circumstances such as
a family arrangement, an act of friendship or generosity etc, to negative and intention to create
a tenancy.

IMPLIED CONDITIONS AND EXPRESS COVENANTS

A lease will normally contain certain agreements regarding payment of rent, insurance,
repairs, assignments, subleases etc.
The agreement will also refer to the remedies of the parties for breaches. These are freely
contracted and fixed.
The agreement may however be silent on some matters or there may be no agreement at
all.
The law implies certain covenants into the agreement because they are essential.

(1) Lessor’s Covenants

See Section 65 (1) of the Land Act

i. Quiet enjoyment
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So long as lessee pays rent and observes and performs the obligations contained or
implied in the lease the lesee shall peaceably and quietly possess and enjoy the land
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leased during the term of the lease without any interruption from the lessor or a
person rightfully claiming through him.
It does not mean absence of noise.
Interference eg removal of windows and doors.

ii. Non-derogation from grant

Not to use or permit any adjoining or neighbouring land that the lessor owns or
leases that would in any way render the leased land or any buildings on the leased
land unfit or materially less fit for any purpose for which they may be used.
It goes hand in hand with quiet enjoyment.

iii. Duty to repair

If part of the building is leased, keep the roof, all external and main walls and drains
and common parts, installations and facilities, including passages and walkways in a
proper state of repair.

iv. Fitness for habitation

If flat, house or room that it is fit for human habitation at the commencement and
throughout the lease period.

v. Suspension of rent
If premises are destroyed by fire, flood or explosion or other accident (not caused
by lessee’s negligence), civil commotion, lightning, storm, earthquake, volcanic
activity or other natural disaster, rent shall be suspended until premises are made
fit for habitation within 6 months and lessee shall have the option to terminate.

vi. Fitness for purpose

If the land or premises can only be used for one purpose, the lessee can terminate
by one month notice if the property can no longer be used for that purpose.

vii. Pay all rates, taxes dues and outgoings

65. Covenants implied in a lease on part of the lessor.

(1) In every lease, there shall be implied covenants by the lessor with the lessee, binding the lessor
(a) that so long as the lessee pays the rent and observes and performs the covenants and
conditions contained or implied in the lease to be observed and performed on the
lessee’s part, the lessee shall peaceably and quietly possess and enjoy the land leased
during the term of the lease without any interruption from or by the lessor or any person
rightfully claiming through the lessor;
(b) not to use or permit any adjoining or neighbouring land that the lessor owns or leases
278

that would in any way render the leased land or any buildings on the leased land unfit or
materially less fit for any purpose for which they may be used, consistent with the terms
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(c) if only part of a building is leased, to keep the roof, all external and main walls and main
drains, and the common parts and common installations and facilities, including common
passages and walkways in a proper state of repair;
(d) if any dwelling house, flat, or room is leased, that the house, flat or room is fit for human
habitation at the commencement of the lease and shall be kept fit for human habitation
during the lease;
(e) that if, the leased premises or any part of them are destroyed or damaged at any time
i. by fire, flood or explosion or other accident not attributable to the negligence of
the lessee, or lessee’s invitees or employees;
ii. by civil commotion; or
iii. by lightning, storm, earthquake, volcanic activity or other natural disaster, so as
to make the leased premises or any part of it wholly or partially unfit for
occupation or use, the rent and any contribution payable by the lessee to the
outgoings on the premises or a just proportion of that rent of contribution
according to the nature and extend of the damage sustained shall be suspended
and cease to be payable until the leased premises have been, once more,
rendered fit for occupation and use; and if the leased premises have not been
rendered fit for occupation and use within six months after their destruction or
damage, the lessee shall have the option to terminate the lease after giving one
month's notice;
(f) if it is an express or implied term of the lease that the leased land or a building on it may
be used for any one specific purpose or purposes, the lessee may terminate the lease, on
giving one month's notice to the lessor, if the land or building cannot be, or can no longer
lawfully be, used for any of those purposes; and
(g) to pay all rates, taxes, dues and other outgoings that are payable in respect of the leased
land except to the extent otherwise specified in the lease.
(2) There shall be implied in every lease covenants by the lessee empowering the lessor to—
(a) either personally or by agents, enter, the leased land or buildings at any reasonable time
for the purpose of inspecting the condition and repair of the premises, or for carrying out
repairs and making good any defects that it is the lessor’s obligation so to do; but in the
exercise of that power, the lessor shall not unreasonably interfere with the occupation
and use of the land and buildings by the lessee ;
(b) terminate the lease by serving a notice of intention to terminate the lease on the lessee
where—
i. any rent is unpaid for one month after the due date for payment, whether or not
a demand, in writing, for payment has been made by the lessor or an agent of
the lessor;
ii. the lessee has failed for a period of one month, to observe or perform any
condition, covenant or other term, the observation or performance of which has
been assumed by the lessee expressly or impliedly in the lease.

(3) Lessor’s Rights

See Section 65(2)
a. Either personally or by agents enter leased land or buildings at a reasonable time to
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inspect the condition of premises and repair.

b. Terminate lease by serving a notice of intention to terminate
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i. If any rent is unpaid for one month after due date whether or not it has
been demanded in writing
ii. There is breach of lessees covenants by lessee for one month
(4) Consents
See Section 67 of the Act
A covenant by lessee not to do anything without the consent of the lessor shall be
construed to mean that the lessor shall not unreasonably withhold the consent if
the lessor applies for the consent
The lessor is supposed to either give or refuse to give consent within a reasonable
time
If lessor refuses to grant consent unless the lessee pays additional rent or premium
or a fine or any other consideration or imposes an unreasonable condition or
objects to a transfer or sublease on grounds of gender or nationality of the
transferee or sub-lessee it will be concluded that it has unreasonably withheld
consent
Unreasonable withholding entitles one to seek damages and recover money lost
Chantly vs. Ward (1913) 29 TLQ the court held that the landlord must show a solid
and substantial cause for withholding the consent

67. Consent by lessor to application by lessee under lease.

(1) On and after the commencement of this Act, a covenant by the lessee not to take an action
without the consent of the lessor shall be construed as requiring the lessor not unreasonably to
withhold consent to the taking of that action by lessee.
(2) If a lessee applies to the lessor for consent to –
(a) transfer or assign the lease;
(b) enter into a sublease;
(c) part with possession of the leased land or buildings;
(d) change the use of the land or buildings from a use which is permitted under the lease;
(e) extend, improve, add on to or in any other way develop any building beyond what is
permitted in the lease;
(f) create a charge over the lease;
(g) take any of the actions referred to in subparagraphs (a), (b), (c), (d), (e); or (h) in relation
to any part of the leased land or buildings, or for any part of the term of the lease, the
lessor shall inform the lessee, in writing, within a reasonable time after receiving the
application, whether the lessor is giving or refusing consent.
(3) Without limiting the generality of the lessor's obligation under subsection (1), consent is
unreasonably withheld if the lessor as a condition of or in relation to the giving of consent—
(a) requires the lessee to pay any money, by way of additional rent, or a premium or a fine
or other consideration for the consent, other than the payment of the lessor's
reasonable expenses incurred in connection with the giving of consent;
(b) imposes on the lessee any unreasonable condition or precondition; or
(c) the lessee has requested for consent to transfer or assign the lease or enter into a
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sublease, and the lessor objects to the gender or nationality or other personal
characteristic of the transferee, assignee or sub-lessee, in circumstances that a
reasonable person would consider those factors irrelevant to the granting of such
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(4) If the lessor refuses to give consent or gives consent subject to a condition or pre-condition and
the lessee so requests, in writing, the lessor shall promptly inform the lessee, in writing, of the
reasons for the refusal or for the imposition of the condition or pre-condition, as the case maybe.
(5) If the lessee or any person, to whom this section applies at the request of the lessee, has paid
any money or suffered any loss in connection with subsection (3), that person may recover that
money and seek damages for that loss from the lessor.
(6) This section shall not prevent the inclusion, in a lease, of a covenant binding the lessee absolutely
not to take any action of the kind referred to in subsection (2).

(5) Conditions implied on leases on part of Lessee

See Section 66 of the Land Act
i. Pay rent at times and in the manner specified
ii. Use land in a sustainable manner and in accordance with the conditions in the lease
including not to cut down any tree unless this is necessary to enable use of the land
iii. Yield up the land and buildings in the same condition as they were when the term of the
lease began except for deterioration caused by:

• Reasonable wear and tear

• Fire, flood, explosion, civil commotion, lightning, storm, earthquake,

volcanic activity or other natural disasters

iv. Keep all boundary marks in repair

v. Keep all buildings comprised in the lease in a reasonable state of repair

66. Conditions implied on leases on part of the lessee.

There shall be implied in every lease, covenants by the lessee with the lessor binding the lessee—
(a) to pay the rent reserved by the lease at the times and in the manner specified in the
lease;
(b) to use any land in a sustainable manner and in accordance with any conditions imposed
on the use of that land by the lease, or any written law or any provisions in a grant of a
public land out of which that lease has been created and, in particular, not to cut down,
injure or destroy any living tree on the land unless the purpose for which the land has
been leased cannot be carried out without so doing;
(c) to yield up the land and buildings in the same condition as they were when the term of
the lease began, except that the lessee shall not be bound to repair damage or restore
the land and buildings to the same conditions they were at the beginning of the lease if
the damage or deterioration of the condition is caused by—
i. reasonable wear and tear;
ii. fire, flood or explosion or other accident not attributable to the negligence of the
lessee, or the lessee’s invitees or employees;
iii. civil commotion;
iv. lightning, storm, earthquake, volcanic activity or other natural disaster;
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(d) to keep all boundary marks in repair; and

(e) to keep all buildings comprised in the lease in a reasonable state of repair
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DETERMINATION (TERMINATION) OF LEASES

1. Forfeiture

S73 of LA forfeiture available where the lessee commits a breach of covenants is adjudged
bankrupt or goes into liquidation.

73. Lessor’s right of forfeiture.

(1) Subject to the provisions of section 76 and to any provisions to the contrary in the lease, the
lessor shall have the right to forfeit the lease if the lessee –
(a) commits any breach of, or omits to perform, any agreement or condition on his part
expressed or implied in the lease; or
(b) is adjudicated bankrupt; or
(c) being a company, goes into liquidation.
(2) The right of forfeiture may be –
(a) Exercised, where neither the lessee nor any person claiming through or under him is in
occupation of the land, by entering upon and remaining in possession of the land; or
(b) Enforced by action in the court.
(3) The acceptance by the lessor of any rent after the service of a notice of forfeiture under section
75 does not operate as a waiver of the lessor’s right of forfeiture unless the lessor has by any
other positive act shown an intention to treat the lease as subsisting.

2. Surrender:

The lessee voluntarily yields up the premises to the lessor. It can be express or implied.
Under S 64 LA surrender of a lease for renewal shall not affect a sublease if the latter will
expire on or before the new head lease expires or if the sublease is periodic which means
notice can be given for its termination.

64. Surrender to enable a new head lease to be entered into not to affect the sublease.
(1) The surrender of a lease for the purpose of enabling a new lease to the same lessee to be
entered into shall not require the surrender of any sublease in respect of the surrendered lease,
if, on or before the date on which the term of the new head lease is to expire,—
(a) the term of the sublease is to expire; or
(b) in the case of a sublease that is a periodic tenancy, the sublease may be terminated by
the giving of the specified period of notice of termination and the expiry of that period.
(2) A sublease preserved under subsection (1)—
(a) shall continue in force as though it had been entered into in respect of the new head
lease; and
(b) all rights and obligations under the sublease, including those which relate to any period
before the surrender of the head lease, shall continue to be enforceable, except to the
extent that any such obligation is, by reason of the fact that a new head lease has been
entered into, more onerous than it would have been had the original head lease not
282

been surrendered.
(3) A sublease entered into in respect of a surrendered lease includes, for purposes of this section,
any sublease entered into by a person deriving title through the lessee under the surrendered
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3. Expiry

The lease lapses because of effluxion of the term.

Periodic tenancies and tenancies at will are an exception since they do not have an agreed
term

4. Merger

Occurs where there is a vesting of the reversion and the leasehold interest in the same
person at the same time e.g. the lessee acquires the reversion.

5. Disclaimer:

By trustee in bankruptcy- S 58 of Bankruptcy Act cap 53 if the property is burdened with

unnecessary covenants making it unsellable

6. Notice:

It is required for fixed term leases if the lease agreement provides as such.
Under periodic tenancies Section 57(4) LA requires notice equivalent to the period of
tenancy. It states A periodic tenancy may be terminated by either party giving notice to the
other, the length of which shall be not less than the period of the tenancy and shall expire
on one of the days on which rent is payable.

7. Frustration

Section 65(e) LA destruction of property through fire, earthquakes, civil commotion etc
entitles a lessee to terminate the tenancy if after 6 months it has not been repaired by giving
1 month notice.

REMEDIES AND RELIEFS OF THE LESSOR AND THE LESSEE

A lease is a contract so the usual remedies under contract eg specific performance,

injunctions, sue for damages etc are available.
However since a lease is a special estate contract which imports some special remedies:

Enforcement by Lessor

1. Forfeiture

S 73 LA it allows the lessor to re-enter the premises making the lease voidable at the
lessor’s option if the lessee:

i. Commits any breach or omits to perform any agreement or condition

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expressed or implied in the lease

ii. Is adjudicated bankrupt
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iii. Goes into liquidation

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It is exercised in two ways

i. If lessee is not in occupation by entering and remaining in possession of the land

ii. By court action
S 74 LA forfeiture has the effect of determining every sublease and other interest appearing
on the register relating to the lease unless the court sets it aside on grounds that it was
procured by fraud or grants relief under S 76 LA.

74.Effect of forfeiture on subleases

The forfeiture of a lease determines every sublease and every other interest appearing in the register
relating to that lease, but –
(a) Where the forfeiture is set aside by the court on the grounds that it was procured by the
lessor in fraud of the sub-lesee; or
(b) Where the court grants relief against the forfeiture under section 76, every such sublease
and other interest shall be deemed not to have determined.

76. Relief against forfeiture.

(1) A lessee upon whom a notice has been served under section 75, or against whom the lessor is
proceeding, by action or re-entry, to enforce his right of forfeiture, may apply to the court for
relief; and the court may grant or refuse relief, as the court, having regard to the proceedings
and the conduct of the parties and the circumstances of the case, thinks fit, and, if it grants relief,
may grant it on such terms as it thinks fit.
(2) The court, on application by any person claiming as sub-lesee or chargee any interest in the
property or part of the property comprised in the lease forfeited or sought to be forfeited, may
make an order vesting the property or such part in such sub-lesee or chargee for the whole
period of the lease or any less period, upon such conditions as the court in the circumstances of
the case thinks fit:
Provided that nothing in this subsection shall apply in the case of a forfeiture arising from a
breach to which the sub-lesee is a party, or from the breach of an express agreement or
condition against subleasing, parting with the possession of or disposing of the property leased.
(3) This section shall have effect notwithstanding any stipulation or agreement to the contrary and
whether the lease is registered or not.

Lessor must give one month notice under Section 75

i. Specifying the breach

ii. If breach is capable of remedy require the lessee to remedy within a reasonable
period specified in the notice
iii. In any case other than default in rent payment require payment of compensation in
money for breach
iv. Relief against forfeiture Section 76 application by lessee(court may grant or refuse
284

to grant relief) or by sub-lessee or charge (court may vest the property on the sub-
lessee or chargee so long as they are not involved in breach. This section applies
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75. Notice before forfeiture.

Notwithstanding anything to the contrary contained in the lease, no lessor shall be entitled to exercise
the right of forfeiture for the breach of any agreement or condition in the lease, whether expressed or
implied, until the lessor has served on the lessee a notice of not less than thirty days –
(a) specifying the particular breach complained of; and
(b) if the breach is capable of remedy, requiring the lessee to remedy the breach within
such reasonable period as is specified in the notice; and
(c) in any case other than non-payment of rent, requiring the lessee to make
compensation in money for the breach,
and the lessee has failed to remedy the breach within thirty days thereafter, if it is capable of remedy,
and to make reasonable compensation in money.

2. Distress for rent

Right given under S 3 of Distress for Rent Act(cap 293)

Gusii Mwalimu Investment Co. Limited & others v Mwalimu Hotel Ltd Civil Appeal no. 160
of 1995 –destrained goods must remain in situ for at least 10 days.
Distress must be carried out within 6 months after expiry of lease

3. Action for recovery for rent arrears

Subject to the limitation period of 6 years under the Limitation of Actions Act (cap
22).
Landlord may only sue after distraining if the goods already sold are inadequate to
meet the rent arrears

4. Action for damages

To put the landlord in the position he would have been had the breach not occurred

5. Injunction to restrain the committing of a breach

PARTS OF A LEASE

PROCEDURE: LEASES

The first step is usually taken by the Landlord when he advertises his premises for letting.
Alternatively, he may engage an estate agent to advertise on his behalf.
Where a prospective tenant is satisfied with the premises, the Landlord will inform his
Advocate that he has agreed to grant a.
Lease to the Tenant and would like the Advocate to act for him (the Landlord)
Generally in practice, the Landlord's Advocate emits- the Lease. Since the Landlord retains
the reversion when he grants a lease, it is for him to indicate what he is willing to grant and
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on what terms: See Rule 24 of the Advocates Remuneration Order Cap 16)
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Particulars required by the Landlord's Advocate

To enable the Landlord's Advocate to draft the Lease document he requires the following
particulars:
(1) Full names and address of the Landlord
(2) Full names and address of the Tenant
(3) Name and-address of the Advocate or the Tenant, if any.
(4) Particulars of the property and whereabouts of documents of title.
(5) If a portion of a building is being leased, the Landlord's Advocate requires an architect's plan
for registration under the RDA
(6) Term of Lease and date of commencement
(7) Rent: Amount and mode of payment - monthly, quarterly, etc. and whether payable in
advance or arrears and on what days of the month.
(8) Covenants to be performed and observed by both parties.
(9) Whether there is any option for renewal and if so, its terms.

Option to renew Clause

Usually, the Landlord agrees to grant a further term containing the same covenants and
agreements as those contained in the Lease except for the clause regarding the option to
renew.
The inclusion of this exception is desirable to exclude any possibility of a perpetual right of
renewal. The clause should state the mode of exercising the option to renew It should also
define the time limit within which the option is to be exercised The clause should also
contain a formula for determining the rent.
An option is defined as "an irrevocable offer which; if properly exercised, becomes a binding
contract."
Once the Landlord's Advocate has obtained the necessary particulars, he will write to the
Tenant or his Advocate, if any, informing him that he understands that the parties have
agreed to the proposed lease, that he has been instructed by the Landlord and that he will
shortly submit a draft lease to the Tenant or his Advocate for approval.
The terms of any correspondence between the parties or their Advocates are important.
This is because a contract may have to be implied in the correspondence if the draft lease is
not approved or signed.
The party seeking to specifically enforce the contract may have to rely on the
correspondence as constituting the contract, note or memorandum required under S.3 (3) of
the Law of Contract Act (Cap 23).

Express Covenants

These are the covenant expressed in the lease document and usually include implied
covenants.

They may differ depending on the usage of the leased property.

Duties of Landlord's Advocate

286

After receiving instructions from the Landlord and communicating with the Tenant or his
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Advocate, the Landlord's Advocate's duties will be to:

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(1) Obtain Documents of Title

(2) Draft the Lease
(3) Send it to the Landlord for approval if necessary
(4) Send it to the Tenant or his Advocate for approval
(5) Make any necessary amendments proposed by the Tenant or his Advocate. Note: These
must be approved by the Landlord
(6) Engross the document.
(7) Prepare and send a completion statement to the Tenant's Advocate requesting for funds for
stamp duty and registration fees
(8) Obtain relevant Consents and Clearance Certificates
(9) Forward the engrossed Lease to the Tenant or his Advocate for execution and attestation as
required
(10) Have the Lease executed by the Landlord and attested as required
(11) Stamp the document and lodge it for registration
(12) Obtain any fees, complete filing and dispose of documents as instructed.
(13) The Advocate may also be required at a later stage to draft a Renewal of lease
(14) He may also be required to approve an Instrument/Deed of Surrender

Duties of the Tenant's Advocate

(1) Investigation of the Landlord's title to determine:

i. whether the Landlord has capacity to grant the Lease

ii. whether there are any encumbrances
iii. what consents are required
iv. whether there are any restrictions or provisions regarding the user of the premises and
therefore to determine whether the land can be used for the purposes intended by the
tenant
(2) Approval of the draft lease
(3) Ensure that the necessary consents- have been- obtained by Landlord
(4) Obtain the necessary funds for stamp duty and registration fees from the Tenant
(5) Have-the Lease duly executed by the Tenant and attested-as required
(6) Obtain his fees, complete filing and dispose of documents as directed
(7) Later: Approval of Renewal of Lease.
(8) Later: Drafting of Instrument of Surrender, engrossing and having it executed by Tenant,
stamping and registering it.

AVOID CONFLICT OF INTEREST

See Francis Mugo & 22 others V James Muthee & 3 others (2005 )e KLR-

Francis Mugo & 22 others V James Muthee & 3 others (2005 )e KLR-
Application for Andrew Musangi to cease acting for plaintiff because he drew and witnessed a lease
between the defendant and other parties relevant to the suit and would be a witness in the suit.
Rule 9 of the Advocates Practice Rules was quoted.- No Advocate may appear in any matter in which
he may be called as a witness to give evidence
287

The Advocate was ordered to disqualify himself.

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SAMPLE LEASE AGREEMENT

LEASE AGREEMENT

-BETWEEN

JOHN JOEL KANYALI

(LESSOR)

-AND-
DALC EDUCATION (PROF. HUMPHREY P.O. OBORAH)
(LESSEE)
OF
OFFICE PREMISES AT TIOSGIMA COMPLEX TITLE NO.
KWALE/DIANI BEACH BLOCK/605
DRAWN BY:
T.O. K’OPERE & CO. ADVOCATES
NSSF Building, Block A, Eastern Wing,
12th Floor, Bishops Road
P.O. Box 11831-00100
NAIROBI
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LEASE AGREEMENT
THIS LEASE AGREEMENT is made this ______ day of _____2009 BETWEEN JOHN JOEL KANYALI of
P.O. Box 423, Ukunda (hereinafter called “the Lessor” which expression shall includes his personal
representatives and assigns where the context so admits) of the one part and DALC EDUCATION
(PROF. HUMPHREY P.O. OBORAH) of P.O. Box 5172-00506 Nairobi (hereinafter called “the Lessee”
which expression shall includes its Successors and assigns where the context so admits) of the
other part:
WHEREAS the Lessor is the Proprietor of Title Number: KWALE/DIANI BEACH BLOCK/605 on a
leasehold from the Government of Kenya and has erected thereon a building known as TIOSGIMA
COMPLEX and the Lessor is desirous of letting and the Lessee is desirous of taking the premises
herein below described being the demised premise;

NOW THIS LEASE WITNESSETH AS FOLLOWS

1.The Lessor agrees to let and the Lessee agrees to take all that office space measuring 5200 Square
feet situated at KWALE/DIANI BEACH BLOCK/605,TIOSGIMA COMPLEX(hereinafter referred to as
the “Demised Premises” )TOGETHER WITH the Lessor’s fixtures and fittings (if any) in or upon the
demised premises together also with AND (In common with theLessor and all other persons from
time to time entitled hereto the right to the use of all easements, services and toilet/lavatories
in/over and under the leased premises)TO HOLD the same unto the Lessee for a period of Six (6)
years from the 1st day of October 2009 to 31st September Two Thousand and Nine(hereinafter
referred to as the “term”) YIELDING therefrom a monthly rental of Kenya Shillings Two Hundred and
Sixty Thousand (Kshs.260,000) at the rate of Kshs.50 per Square foot payable quarterly in advance
for the period from 1st October 2009 to 31st September 2010 and subsequently there shall be a (10)
ten per centum increment per year on the monthly rental payable quarterly in advance for the
period from 1st October 2010 to 31st September 2015 when this Lease shall expire.

The above rental is exclusive of any taxes including VAT and charges which may at any time be
imposed on the property by the government or any other lawful authority and/or services to be
provided by the lessor including cleaning, parking or loading spaces which shall be contracted and
agreed and/or charged separately.

2. THE LESSEE HEREBY COVENANTS WITH THE LESSOR AS FOLLOWS:-

a) To pay the rent in the manner aforesaid as any other sums payable and /or provided in the
lease.

b) To pay all sums or charges payable in respect of the installation of any water meter,
electricity meter or telephone connection by or at the request of the lessee at the demised
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premises.

c) To pay the head rent payable to the government of the said Republic.
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d) To pay all telephone charges (if any) electricity conservancy and water charges raised in
respect of the demised premises directly to the relevant authorities.

e) To pay the amounts for rates, taxes, assessments and other charges may at any one time
during the said term be assessed or imposed on the premises or any part thereof or on the
landlord of the tenant in respect thereof by the Government of any Municipal or Local
Authority.

f) To keep the exterior of all windows and the interior of the leased premises including fixtures
and fittings clean and in good state of repair, tenantable order and condition and also to
make good and stoppage or damage of the drains caused by the negligence of the lessee or
a member of the lessee’s staff,servants,licences or visitors.

g) To use the demised premises for normal office work and related purposes as are reasonable
and expedient for the Lessee in the ordinary trade undertaking or business of the lessee and
if the Lessee desires to use the premises for other services it shall first obtain the consent in
writing of the lessor PROVIDED THAT:-

i) The Lessee shall not do or permit to be done on the demised premises any act or
thing contrary to the council by-laws.

ii) Bring or store on the demised premises any dangerous, inflammable or offensive
articles.

iii) Do or permit to be done anything that would or might be or become a nuisance,

annoyance, inconvenience, disturbance to the lessor or its Tenants or the owners or
occupiers of adjoining or neighbouring premises.

h) Not to make any alteration or additions to the demised premises, or erect any fixture
thereon without the prior written consent of the lessor provided that it shall be permissible
for the Lessee with such consent as aforesaid and upon disclosure of the proposed plans,
designs and materials to be used to alter or partition the interior of the demised premises
from time to time bearing costs and provided further that upon determination of this lease
the Lessee shall be bound to remove any such alterations and additions and to make good
any damage sustained by such removal.

i) Not to transfer, sublet, charge or part with the possession of the demised premises or any
part thereof without the prior written Consent.

j) Not to place any sign, notice or advertisements on the exterior of the demised premises
without prior notice or advertisement shall comply with lessor’s specifications.
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k) Not to hold or cause to be held any sale auction on the demised premises.
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l) Not to do or cause anything to be done whereby the title of the said demised premises may
be rendered void or voidable and at all time indemnify the Lessor against any damages and
liability therein.

m) To comply in all respects with the provisions of every act of parliament, by laws, regulations
and instruments so far as the same shall affect the demised premises and to indemnify the
Lessor in respect of all such matters.

n) To furnish a copy to theLessor of any notice, direction, licence, consent or permission

relating to the demised premises within Fourteen (14) days or receipt thereof by the Lessee.

o) Not to obstruct, permit or cause to be obstructed in any manner the corridors, passages,
stair cases and passenger lifts in the building and not to place or deposit anything in nor
obstruct nor cause anything to be placed or deposited in the mains of access to the demised
premises or any fore court area, yard of the escape and not to cover up or obstruct nor
cause to be covered or obstructed any glass, windows or partition in any manner
whatsoever.

p) Not to permit or cause to be done anything whereby any insurance of the building against
loss or damages by fire may become void or voidable or whereby the rate of premium for
any such insurance may be increased and to repay to the lessor all the sums paid by him by
way of additional increased premiums and all expenses incurred by him in or about such
insurance or the renewal thereon rendered necessary by a breach of this covenant provided
that the Lessee shall be responsible for insuring any plate-glass within the demised
premises.

q) Not to do or permit or suffer to be done anything in or upon the demised premises or any
part thereof which may at any time be or become a nuisance or annoyance to the
neighbours of injurious or detrimental to the reputation of the demised premises.

r) Not to permit any open internal combustion fires to be burned in the demised premises
without the consent of the Lessor in writing first had and obtained nor without the said
consent to bring or permit to be brought or kept in or on the demised premises any
inflammable combustive or explosive fluid,material,chemical or substance.

s) To permit the caretaker employed by the Lessor by prior appointment to enter the demised
premises in the ordinary course of his duty.

t) To permit the Lessor and any persons authorized by him respectively with or without tools
after giving reasonable prior notice to the Lessee(or immediately in case of need)to enter
upon the demised premises:-
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i) For the purposes of carrying out thereon and affecting repairs to the building for
which the Lessor may be liable under its covenants in that behalf hereinafter
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contained or which the lessor may consider to desirable or necessary and also on or
to any adjoining or neighbouring premises now or hereafter belonging to the Lessor.

ii) To review the condition of the same given notice in writing to the lessee of all wants
of reparation for which the Lessee is liable and within fourteen (14) days next after
every notice (or immediately in case of need) the lessee shall make good all such
wants or reparation and in default thereof shall permit the Lessor or execute the
necessary work the cost of which shall be paid by the Lessee to the lessor on
demand.
iii) The cost of preparing the Lease, stamp duty and the registration thereon shall be on
account of the lessee and shall be payable on returning the standard Lease duly
approved as drawn.

u) TO YIELD upon the expiration or sooner determination of the term hereby granted and the
demised premises to the lessor with fixtures and fittings thereto (other than the partitions,
fittings and fixtures installed in the demised premises with the consent of the lessor
pursuant to the provisions of the lease which shall remain the property of the Lessee) in
such good and tenantable repair and condition with all locks, keys and fastenings completed.
The Lessor’s right to vacate the possession on the expiry or sooner determination of this
lease shall be deemed to be of essence of the contract between the parties hereto.

.3. THE LESSOR HEREBY COVENANTS WITH THE LESSEE AS FOLLOWS:-

a) To give the Lessee peaceful and quiet possession of the demised premises for the term
hereby granted without any interruptions by the lessor or his agents.

b) To insure and keep insured the building from loss or damage by fire, acts of God and such
other risks as the Lessor may deem expedient and to pay all premiums necessary for the
purpose.

4. IT IS HEREBY AGREED BETWEEN THE LESSOR AND THE LESSEE AS FOLLOWS:-

a) The Lessor will only give possession to the Lessee when the lessee has executed the lease
herein and paid all sums as agreed in this lease.

b) The Lessor shall allocate to the Lessee a designated parking area within the demised premises
provided that the Lessee shall bear all charges/expenses arising out of the use of the said
parking areas.

c) That the Lessee shall not withhold or delay any payment of the rent or any other sum due
under this Lease after the date on which it falls due or in any way prejudice or affect the
rights of the landlord in the lease including the proviso for re-entry. PROVIDED THAT, the
lessee shall pay interest on any such sums from the date they fall due to the date of full
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d) Nothing in this Lease shall be constructed as imposing upon the lessor

anydutyorobligationtoenforceanyterms,covenants,conditions,restrictions,stipulations and
provisions in any other lease as against any tenant nor shall the Lessor be liable to the
lessee for violation of the same by nay other tenants or servants ,employees ,agents
,visitors, or licencees of any tenant. The covenants, conditions, restrictions, stipulations and
the provisions above set forth or referred to.

e)If the rent shall at any time during the period of the tenancy become more than Seven(7) days
in arrear whether legally demanded or not of the lessee shall omit to perform or observe
any of the covenants herein contained then the lessor or his authorized agent retain the
right to terminate the tenancy and assume possession of the Leased premises provided that
in the event the Lessor will first give the Lessee Seven (7) days notice of the breach and the
proposed redress which if not complied with by the lessee within the said Seven (7) days
then the Lessor may tale without further notice to tenant whatever action it thinks fit to
recover the arrears of the rent and/or to obtain the redress required.

f) If the Lessee breaches any condition terms or clause of this Lease in any way
whatsoever(such as sub-let or assign without the written consent of the lessor or abandon
the premises in any way for a period of Seven(7) days or more or becomes bankrupt or
enter into composition with his creditors to enter into receivership or liquidation or
otherwise becomes unable to pay rent or fails to pay rent for a period of Seven(7) or more
days whether demanded or not or commits any other breach of any of the terms or
conditions of this Lease, it shall be lawful for the Lessor at any time thereafter to re-enter
the demised premises or part of them in the name of whole without notice and shall revert
to the unencumbered possession of the lessor and it shall be for the Lessor thereafter to
take whatever action he may deem fit to obtain redress including leasing the premises to a
new party.

g) If the Lessee shall desire to renew the Lease on the expiry of the present terms hereby
granted the Lessee shall give to the lessor Two(2) calendar months notice in writing and
reserve all the demised premises for a further period to be agreed upon the terms herein set
forth the option to renew only excepted.

h) If the lessor shall desire not to renew this Lease on the expiry of the present term hereby
granted, the lessor shall give to the Lessee Three (3) calendar months notice in writing
before the expiry of this Lease.

i) The lessee shall deposit with the Lessor an amount equal to Three (3) months rent as
security for the due performance by the lessee of its obligations under the Lease and if the
Lessee shall make any default in the performance of any of his obligations herein, then the
Lessor may expend the deposit or any part thereof in making good such default and save as
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provided herein the deposit shall be refundable to the Lessee after the expiry of and in
accordance with the terms of the lease. In the event of the lessee not proceeding to execute
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the Lease herein and to occupy the demised premises the security deposit shall be forfeited
to the lessor.

j) The Lessor or his authorized agent retains the right to enter the demised premises to carry
out inspections and will first obtain permission of the lessee to enter and such permission
shall not be unreasonably withheld AND THE LESSEE WILL ALSO during the last Two (2)
months of the tenancy permit any person or persons to enter and inspect the demised
premises at reasonable times upon productions of an order to view from the lessor of his
authorized agent.

k) The Lessor shall not be liable for any loss, damage or injury to the Lessee or its servants
caused by:-

i) Any burglary or Theft.

ii) Any Act or default of the Lessee,servants,licencees,or invites with reference to the
maintenance or use of any pipes, sanitary water or electrical appliances therein of
any part of the building,licencees,or invites with reference to the maintenance or
use of any pipes, sanitary water or electrical appliances therein or any part of the
building.

l)The Lease can be terminated by either party before the expiry of the term of lease by a written
notice of three(3) months and that any notice under this lease shall be in writing and shall be
sufficiently served;

i) If addressed to the lessor either delivered personally, or by prepaid registered post

to the postal address of the Lessor herein before stated.

ii) If addressed to the Lessee either personally delivered or by prepared registered post
to the postal addresses of the Lessee hereinbefore stated. AND any notice sent by
registered post shall be deemed to be received by the intended recipient on the
fourth (4th) business day next following the day of posting and proof of posting shall
be proof of delivery.

IN WITNESS WHEREOF this lease is duly executed by the parties hereto the year and date first
herein stated
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SIGNED by the LESSOR ]

JOHN JOEL KANYALI ] _____________

] (LESSOR)
]

]
In the Presence of: ]
]

SIGNED by the Lessee]

PROF. HUMPHREY P.O. OBORAH ] _____________

] (LESSEE)

In the Presence of: ]

DRAWN BY:

T.O. K’OPERE & CO. ADVOCATES

NSSF Building, Block A, Eastern Wing,

12th Floor, Bishops Road

P.O. Box 11831-00100

NAIROBI
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CONTROL OF DEALINGS IN TENANCY RELATIONSHIPS

Another genre of transactions in land that are subject to the province of controlled
transactions is dealings in tenancy relationships.
In this respect the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act (Cap
301) and the Rent Restriction Act are the basic statutes of relevance.
The regulations obtaining under these two legislations are discussed below.

A) THE LANDLORD AND TENANT (Shops, Hotels and Catering Establishments) ACT (CAP 301)
Business premises tenancies are subject of controlled transactions under the Landlord and
Tenant (Shops, Hotels and Catering Establishments) Act (Cap 301).
The Act overrides any other law which is in conflict with it as regards controlled tenancies.
Protection under the Act depends basically on the duration of the tenancy and the purpose
for which the tenancy is created. As to the latter factor i.e. the purpose for which the
tenancy is created, the Act relates to premises leased for purposes of running shops, hotels
and catering establishments.

Shop-A shop is defined by the Act to mean premises occupied wholly or mainly for the purposes of
retail or wholesale trade or business or for the purpose of rendering services for money or money’s
worth. See section 2(1).

Hotel-A hotel in the context of the Act means any premises in which accommodation or
accommodation and meals are supplied or are available for supply to five or more adult persons in
exchange for money or other valuable consideration. See section 2(1).

Catering Establishment-A catering establishment is defined by the Act to refer to any premises on
which is carried out the business of supplying food or drink for consumption on such premises, by
persons other than those who reside and are boarded on such premises. See section 2(1).

Therefore, where the demised premises are used to run a school or a petrol station under an
operator agreement, then the Act does not apply.
A controlled tenancy is defined under section 2(1) of the Act to mean tenancy of a shop,
hotel or catering establishment: -
(a) Which has not been reduced into writing; or
(b) Which has been reduced into writing and which:
• Is for a period not exceeding five years; or
• Contains provision for termination, otherwise than for breach of covenant,
within five years from the commencement thereof; or
• Relates to premises to which the Act has been extended to apply the
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Minister vide a Gazette Notice.

The most essential feature of a controlled tenancy is that it can only be terminated or
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4. Matters relating to controlled tenancies generally.

(1) Notwithstanding the provisions of any other written law or anything contained in the terms and
conditions of a controlled tenancy, no such tenancy shall terminate or be terminated, and no
term or condition in, or right or service enjoyed by the tenant of, any such tenancy shall be
altered, otherwise than in accordance with the following provisions of this Act.
(2) A landlord who wishes to terminate a controlled tenancy, or to alter, to the detriment of the
tenant, any term, or condition in, or right or service enjoyed by the tenant under, such a tenancy,
shall give notice in that behalf to the tenant in the prescribed form.
(3) A tenant who wishes to obtain a reassessment of the rent of a controlled tenancy or the
alteration of any term or condition in, or of any right or service enjoyed by him under, such a
tenancy, shall give notice in that behalf to the landlord in the prescribed form.
(4) No tenancy notice shall take effect until such date, not being less than two months after the
receipt thereof by the receiving party, as shall be specified therein:
Provided that-
i. Where notice is given of the termination of a controlled tenancy, the date of termination
shall not be earlier than the earliest date on which, but for the provisions of this Act, the
tenancy would have, or could have been, terminated;
ii. Where the terms and conditions of a controlled tenancy provide for a period of notice
exceeding two months, that period shall be substituted for the said period of two
months after the receipt of the tenancy notice;
iii. The parties to the tenancy may agree in writing to any lesser period of notice.
(5) A tenancy notice shall not be effective for any of the purposes of this Act unless it specifies the
grounds upon which the requesting party seeks the termination, alteration or reassessment
concerned and requires the receiving party to notify the requesting party in writing, within one
month after the date of receipt of the notice, whether or not he agrees to comply with the
notice.
(6) A tenancy notice may be given to the receiving party by delivering it to him personally, or to an
adult member of his family, or to any servant residing with him or employed in the premises
concerned, or to his employer, or by sending it by prepaid registered post to his last known
address, and any such notice shall be deemed to have been given on the date on which it was so
delivered, or on the date of the postal receipt given by a person receiving the letter from the
postal authorities, as the case may be.

The procedure for terminating a controlled tenancy under the Act was well summarized in
the case of Manaver N. Alibhai t/a Diani Boutique v South Coast Fitness & Sports Center
Ltd., Civil Appeal No. 203 of 1994 (Court of Appeal at Mombasa).
Therefore, according to Section 4(2) of the Act, a landlord who wishes to terminate or alter a
controlled tenancy must give notice to the tenant in the prescribed form.
A notice under the Act may be given to the receiving party by delivering it to him personally,
or to an adult member of his family, or to any servant residing with him or employed in the
premises concerned, or to his employer, or by sending it by prepaid registered post to his
last known address. It is also stipulated that such a notice shall be deemed to have been
given on the date on which it was so delivered, or on the date of the postal receipt given by
a person receiving the letter from the postal authorities, as the case may be. See Section
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Likewise, a tenant who wishes to obtain a reassessment of the rent or alter any term or
condition of a controlled tenancy must give notice to the landlord in the prescribed form.
On either part, the notice shall only take effect after two months after the receipt thereof
by the receiving party. See Section 4 (3) . Does this contradict Section 57 (4) of the Land Act
on the termination of periodic leases
Failure to give notice in the prescribed form renders the efforts of the party wishing to alter
or terminate the tenancy a venture in futility. See Tiwi Beach Hotel Ltd. v Juliane Ulrike
Stamm (1991) KLR 658

Tiwi Beach Hotel Ltd. v Juliane Ulrike Stamm (1991) KLR 658
The Decision of the Court of Appeal in is instructive in this regard. It said:
“If the appellant thought that those letters were notices, I must disabuse it of that notion by stating at
once that they were not in the prescribed form and consequently had no effect on the respondent’s
tenancy. For this reason alone the respondent was entitled to an order restraining the appellant and the
judge was therefore perfectly justified in making this order.”

In addition to the above requirements, a tenancy notice must specify the grounds upon
which the alteration or termination is sought. See Section 4(5)
Further, such a notice must require the other party to intimate whether or not he intends to
comply with its requirements, within thirty (30) days of receipt thereof.
Upon receipt of the notice the other party may, before expiry of the notice, refer the matter
to the Business Premises Tribunal, established under section 11 of the Act. See Section 6(1)

6. Reference to Tribunal.
(1) A receiving party who wishes to oppose a tenancy notice, and who has notified the requesting
party under section 4 (5) of this Act that he does not agree to comply with the tenancy notice,
may, before the date upon which such notice is to take effect, refer the matter to a Tribunal,
whereupon such notice shall be of no effect until, and subject to, the determination of the
reference by the Tribunal:
Provided that a Tribunal may, for sufficient reason and on such conditions as it may think fit,
permit such a reference notwithstanding that the receiving party has not complied with any of
the requirements of this section.
(2) A Tribunal to which a reference is made shall, within seven days after the receipt thereof, give
notice of such reference to the requesting party concerned.

Terms and conditions to be implied in every tenancy not reduced in writing or not in
controlled form.
i. That the premises are fit for habitation and comply with the laws relating to health
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in all respects.
ii. That where the premises are destroyed by fire, civil commotion, or accident,
through no negligence on the part of the lessee, any liability to pay rent shall be
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iii. The lessee shall have quiet enjoyment of premises provided that he complies with
express or implied covenants.
iv. The lessor shall not use adjoining land or premises in a way which would render
leased premises unfit for the purpose for which they were let.
v. The lessor shall be responsible for all repairs to roofs, main walls, main drains, main
electric wiring and structures, and shall be responsible for all necessary renewals to
the premises.
vi. The lessee shall be responsible for all internal repairs and decorations, fair wear and
tear excepted.
vii. The lessor shall be responsible for the repair, maintenance, cleaning and lighting of
common parts where part of a building is let.
viii. The lessee shall pay rent for the premises in advance.
ix. The lessor shall pay all rates, taxes and similar outgoings, unless the lessee is
responsible therefore under any written agreement.
x. The lessee shall keep the fixtures and fittings in good and tenantable repair.
xi. The lessee shall permit the lessor or his agent and his workmen to enter the
premises and to examine or repair the same at all reasonable times after giving
reasonable notice thereof.
xii. The lessee shall not transfer, part with possession, or sublet the premises or any
part thereof without the consent of the lessor, which consent shall not be
unreasonably withheld.

THE BUSINESS PREMISES TRIBUNAL: POWERS AND SALIENT FEATURES

The Business Premises Tribunal is established under section 11 of the Act.
It is the primary body for adjudicating matters related to controlled tenancy as was stated in
Alex Kadenge Mwendwa v Grace Wangari Ndikimi & 2 others.

Alex Kadenge Mwendwa v Grace Wangari Ndikimi & 2 others. 2006) eKLR- Civil Suit no. 2974 of 1991
(High Court at Nairobi).
In this case the plaintiffs lodged a controlled tenancy dispute in the High Court their justification been
that the High Court is vested with superior powers. This, he did even despite the fact that the
respondents had filed a reference in the Business Premises Tribunal. In dismissing the suit, J.B. Ojwang
indicated that:

“There is a jurisdictional question attached to the definitions of rights and obligations in the Landlord and
Tenant (Shops, Hotels and Catering Establishments) Act (Cap 301), which takes the basic dispute
settlement forum to be the Business Premises Tribunal; and the jurisdiction of that Tribunal is not to be
excluded but for good cause. When, therefore, the deceased tenant submitted a business premises
dispute before the Tribunal, he thereby activated a legal process which required the plaintiff herein to
deal in the first place with that Tribunal and not leapfrog into the High Court. I therefore reject counsel’s
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submissions that the plaintiff’s grievances should only have been resolved in the High Court.”
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The Tribunal consists of a person or persons appointed as such by the Minister.

Upon a reference been made to the Tribunal, it may approve the terms of the tenancy
notice or order that it be of no effect or it may make such further order(s) as it thinks
appropriate. See Section 9 of the Act

9. Decision of Tribunal and effect thereof.

(1) Upon a reference a Tribunal may, after such inquiry as may be required by or under this Act, or
as it deems necessary-
(a) approve the terms of the tenancy notice concerned, either in its entirety or subject to
such amendment or alteration as the Tribunal thinks just having regard to all the
circumstances of the case; or
(b) order that the tenancy notice shall be of no effect; and in either case
(c) make such further or other order as it thinks appropriate.
(2) Without prejudice to the generality of this section, a Tribunal may, upon any reference
(a) determine or vary the rent to be payable in respect of the controlled tenancy, having
regard to the terms thereof and to the rent at which the premises concerned might
reasonably be expected to be let in the open market, and disregarding-
i. any effect on rent of the fact that the tenant has, or his predecessors in title
have, been in occupation of the premises;
ii. any goodwill attached to the premises by reason of the carrying on thereat of
the trade, business or occupation of the tenant or any such predecessor;
iii. any affect on rent of any improvement carried out by the tenant or any such
predecessor other-wise than in pursuance of an obligation to the immediate
landlord;
(b) terminate or vary any of the terms or conditions of the controlled tenancy, or any of
the rights or services enjoyed by the tenant, upon such conditions, if any, as it deems
appropriate.
(3) Where a Tribunal has made a determination upon a reference, no further tenancy notice shall
be given in respect of the premises concerned, which is based on any of the matters affected
by the determination-
(a) in the case of an assessment of rent, until after the expiration of two years; or
(b) in any other case, until after the expiration of twelve months, after the date of the
determination, unless the Tribunal, at the time of the determination, specifies some
shorter period.

It thus enjoys a wide range of powers enumerated under Section 12(1) of the Act, amongst
others, as follows:
(a) To determine whether or not any tenancy is a controlled tenancy;
(b) To determine or vary the rent to be payable in respect of any controlled tenancy;
(c) To apportion the payment of rent payable under a controlled tenancy among tenants
sharing the occupation of the premises comprised in the controlled tenancy;
(d) Where the rent chargeable in respect of any controlled tenancy includes a payment by way
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of service charge, to fix the amount of such service charge.

(e) To make orders, upon such terms and conditions as it thinks fit, for the recovery of
possession and for the payment of arrears of rent and mesne profits;
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12. Powers of Tribunals.

(1) A Tribunal shall, in relation to its area of jurisdiction have power to do all things which it is
required or empowered to do by or under the provisions of this Act, and in addition to and
without prejudice to the generality of the foregoing shall have power-
(a) to determine whether or not any tenancy is a controlled tenancy;
(b) to determine or vary the rent to be payable in respect of any controlled tenancy, having
regard to all the circumstances thereof;
(c) to apportion the payment of rent payable under a controlled tenancy among tenants
sharing the occupation of the premises comprised in the controlled tenancy;
(d) where the rent chargeable in respect of any controlled tenancy includes a payment by
way of service charge, to fix the amount of such service charge;
(e) to make orders, upon such terms and conditions as it thinks fit, for the recovery of
possession and for the payment of arrears of rent and mesne profits, which orders may be
applicable to any person, whether or not he is a tenant, being at any material time in
occupation of the premises comprised in a controlled tenancy;
(f) for the purpose of enabling additional buildings to be erected, to make orders permitting
landlords to excise vacant land out of premises of which, but for the provisions of this Act,
the landlord could have recovered possession;
(g) where the landlord fails to carry out any repairs for which he is liable-
i. to have the required repairs carried out at the cost of the landlord and, if the
landlord fails to pay the cost of such repairs, to recover the cost thereof by
requiring the tenant to pay rent to the Tribunal for such period as may be
required to defray the cost of such repairs, and so that the receipt of the Tribunal
shall be a good discharge for any rent so paid;
ii. to authorize the tenant to carry out the required repairs, and to deduct the cost
of such repairs from the rent payable to the landlord;
(h) to permit the levy of distress for rent;
(i) to vary or rescind any order made by the Tribunal under this Act;
(j) to administer oaths and order discovery and production of documents in like manner as in
civil proceedings before the High Court, to require any landlord or tenant to disclose any
information or evidence which the Tribunal considers relevant regarding rents and terms
or conditions of tenancies, and to issue summons for the attendance of witnesses to give
evidence or produce documents, or both, before the Tribunal;
(k) to award costs in respect of references made to it, which costs may be exemplary costs
where the Tribunal is satisfied that a reference to it is frivolous or vexatious;
(l) to award compensation for any loss incurred by a tenant on termination of a controlled
tenancy in respect of goodwill, and improvements carried out by the tenant with the
landlord's consent;
(m) to require a tenant or landlord to attend before the Tribunal at a time and place specified
by it, and if such tenant or landlord fails to attend the Tribunal may investigate or
determine the matter before it in the absence of such tenant or landlord;
(n) to enter and inspect premises comprised in a controlled tenancy in respect of which a
reference has been made to the Tribunal.
(2) A Tribunal shall not have or exercise any jurisdiction in any criminal matter, or entertain any
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criminal proceedings for any offence whether under this Act or otherwise.
(3) A Tribunal may employ officers, valuers, inspectors, clerks and other staff for the better carrying
out of the purposes of this Act: Provided that, where a Tribunal has deputed a valuer, inspector,
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communicated to the landlord or tenant or both.

(4) In addition to any other powers specifically conferred on it by or under this Act, a Tribunal may
investigate any complaint relating to a controlled tenancy made to it by the landlord or the
tenant, and may make such order thereon as it deems fit.
(5) No matter or thing done by a Tribunal, or any officer, valuer or inspector or other person deputed
by the Tribunal shall, if done bona fide in the execution or purported execution of the provisions
of this Act or any subsidiary legislation made thereunder, subject such Tribunal, officer valuer,
inspector or other person to any action, liability, claim or demand whatsoever.
(6) Any person who, without lawful excuse, fails to comply with any order, requirement or summons
given or issued under paragraph (j) of subsection (1) of this section, or who, having attended as a
witness under summons, departs without the permission of the Tribunal or fails to attend after
any adjournment after being ordered to attend, shall be guilty of an offence and liable to a fine
not exceeding one thousand shillings.

However, the Tribunal doesn’t have or exercise jurisdiction over criminal matters.
It therefore cannot entertain any criminal proceedings for any offence whether under the
Act or otherwise.
It also has no powers which are the sole province of the High Court.
For example, the Tribunal has no power to order stay pending appeal or issue an injunction.
See Christopher v Anthony Muchora, HCCC No. 106 of 1994.
Appeals from the decision of the Tribunal lies to the High Court. See Section 15(1).

15. Appeal to court.

(1) Any party to a reference aggrieved by any determination or order of a Tribunal made therein
may, within thirty days after the date of such determination or order, appeal to the High Court:
Provided that the High Court may, where it is satisfied that there is sufficient reason for so doing,
extend the said period of thirty days upon such conditions, if any, as it may think fit.
(2) In hearing appeals under subsection (1) of this section, the court shall have all the powers
conferred on a Tribunal by or under this Act, in addition to any other powers conferred on it by
or under any written law.
(3) {Deleted by 2 of 1970. s. 13.)
(4) The procedure in and relating to appeals in civil matters from subordinate courts to the High
Court shall govern appeals under this Act:
Provided that the decision of the High Court on any appeal under this Act shall be final and shall
not be subject to further appeal.

Strangely, it is provided by the Act that the decision of the High Court on any appeal from
the Tribunal shall be final and shall not be subject to further appeal.
Traditionally where an appeal is from a decision of the Tribunal under the Landlord and
Tenant Act Cap 301, two judges of the High Court are appointed to hear the appeal. The
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reason for this is that the High Court is the final court of appeal. It does mean though that a
single judge cannot hear such appeal. Indeed they can. See Josephat Thuo Githachuri t/a
Kiarigi Building Contractors v Parkview Properties Ltd (2005) eKLR- Civil Appeal 539 of
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Further, the schedule to the Act outlines terms and conditions which are implied by the Act
in controlled tenancies whether or not they are in the prescribed form.

RENT RESTRICTION ACT (CAP 296)

The Rent Restriction Act (Cap 296) is a an act of parliament which makes provisions for
restricting the increase of rent, the right to possession and the exaction of premiums, and
for fixing standard rents, in relation to dwelling houses, and for other purposes incidental to
or connected with the relationship of landlord and tenant of a dwelling-house.
Essentially, the Act aims at protecting tenants of dwelling-houses to which it applies from
arbitrary increase of rents, or dispossession by landlords. The Act applies to all dwelling-
houses, other than the following:

i. Excepted dwelling-houses;
ii. Dwelling-house let on service tenancies;
iii. Dwelling-houses which have a standard rent exceeding two thousand five hundred
shillings per month, furnished or unfurnished.

a dwelling-house means any house or part of a house or room used as a dwelling or place of residence,
and includes the site of the house and the garden and other lands and buildings let therewith and not as
a separate entity or source of profit. See section 3(1).

An excepted dwelling-house means a dwelling-house belonging to any class which the minister may, by
notice in the Gazette except the provisions of the Rent Restriction Act. For example, under Gazette
Notice 4662/1966 all dwelling-places which are the property of and let to the tenant by the
Government, Kenya Railways, the Kenya Ports Authority, the Kenya Posts and Telecommunication
Corporation or a Local Authority were excepted from the application of the Act.
A service tenancy in relation to a dwelling-house, means a letting by the landlord to an employee in
connection with his employment. See section 3(1).

The Act at section 4(1) empowers and obligates the Minister to establish such Rent
Tribunals, having jurisdiction in such areas as he may think fit. As such, the Rent Restriction
Tribunal is the primary dispute resolution machinery under the Act and where, for example,
one institute two concurrent proceedings before the Tribunal and the High Court, the same
will be referred back to the Tribunal. See Shah v Orodho & 2 others (1990) KLR 246; Oza v
Jani (1957) EA 184; and Gordhandas v Narotam (1957) EA 223.
The Tribunal consists of the chairman, a deputy chairman and a panel of members all of
whom are appointed by the Minister. See Sections 4(2), (3) & (4) RRA.

4. Rent Tribunals.
(1) The Minister shall, by notice in the Gazette, establish such Rent Tribunals, having jurisdiction in
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such areas, as he may think fit.

(2) The Minister shall, by notice in the Gazette, appoint a chairman of each tribunal and may
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chairman of any tribunal.

(3) No person shall be qualified for appointment as chairman or deputy chairman of a tribunal
unless he holds, and has held for a total period of not less than five years, one or other of the
qualifications specified in paragraphs (a), (b), (c) and (d) of subsection (1) of section 12 of the
Advocates Act.
(4) The Minister shall, by notice in the Gazette, appoint a panel of members, consisting of such
number of persons as he may think fit, for each tribunal.
(5) For the purpose of exercising any of its functions under this Act, a tribunal shall be presided
over by the chair-man or deputy chairman of the tribunal and shall consist of the person 50
presiding and two members selected by the Permanent Secretary to the Ministry responsible
for the administration of this Act from the panel of members appointed under subsection (4):
Provided that where for any reason either or both of the members so selected is or are not
present for any part of a hearing, the jurisdiction of the tribunal may be exercised by the
chairman or deputy chairman sitting either with one such member or alone, as the case may be;
and no question shall be raised in any proceedings, whether under this Act or other-wise, as to
the validity or method of the selection of any such member.
(6) Save in the exercise of its power under section 5 (1) (a), the jurisdiction of the tribunal presided
over by a deputy chairman shall be limited to cases in which the standard rent of the premises
which are the subject of the application does not exceed one thousand five hundred shillings;
and, subject to that limitation, in respect of any of the functions exercised by a tribunal whilst
presided over by a deputy chairman, any reference in this Act to the chairman of a tribunal shall
include reference to a deputy chairman.
(7) Any matter considered by a tribunal shall be decided by the votes of the majority of the persons
constituting the tribunal and voting, and the person presiding shall have a casting as well as a
deliberative vote: Provided that any point of law arising in any proceedings before a tribunal
shall be reserved to and pronounced upon by the person presiding exclusively.
(8) Notwithstanding any other provision of this Act, the chairman of a tribunal acting alone shall
have jurisdiction to deal with all interlocutory applications which are not of such a nature as to
effect a decision in any matter which is in issue between parties.
(9) Where the chairman of a tribunal is of opinion that a question arising m any proceedings before
the tribunal involves a substantial question of law, he may, and shall if any party to the
proceedings so requests, adjourn the proceedings and refer that question of law to the High
Court for a decision thereon, and, upon such decision being given, the tribunal shall dispose of
the proceedings in accordance therewith.
(10) A member of a tribunal shall hold office during the Minister's pleasure: Provided that a
member may at any time resign by giving notice in writing of his resignation to the Minister.

In its proceedings, the Tribunal is presided over by the chairman or deputy chairman and
must consist of the person so presiding and two members selected by the Permanent
Secretary to the Ministry responsible for administration of the Act. See Section 4(5) RRA.

Thus, where the chairman of the Tribunal dies the Tribunal ceases to be lawfully constituted
and the remaining members cease to have any jurisdiction. See Thakkar & Another v Joram
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& Others (1973) EA 133.

See Agapito Pereira v Said Bin Seif Properties,
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Agapito Pereira v Said Bin Seif Properties(2004) eKLR- Civil Appeal No. 107 of 2000 (High Court at
Mombasa).

The appellants appealed against a decision of the Rent Restriction Tribunal on the ground, amongst
others, that it was not properly constituted. In particular, it was contended that the proceedings
commenced with only the chairman and one member present. It held that this was contrary to section
4(5) of the Act and that the position could not be vitiated by a reading of the provision to the section as
the provision operates only in the absence of the selected members.

Obviously, the proceedings must also be in tandem with the rules of natural justice. In the afore-cited case
of Agapito Pereira, a member who was sitting at the Tribunal was appointed a valuer and his report was
relied upon in the assessment of the rent. It was held that the deliberations of the Tribunal were rendered
null and void for they were in contradiction with the rules of natural justice.

Matters considered by the Tribunal are decided by the votes of the majority of the persons
constituting the Tribunal with the one presiding having both a casting and a deliberative
vote.
Under the Rent Restriction Regulations made under the Act, Regulation 9 provides that a
member of the Tribunal shall not participate in a decision of Tribunal unless he has been
present through the whole of the hearing.
However, when the point arising in a proceeding before a tribunal is one on a point of law,
then it shall be reserved to and pronounced upon by the person presiding exclusively.
Further, the chairman of the Tribunal acting alone has jurisdiction to deal with all
interlocutory applications which are not of such a nature as to effect a decision in matter
which is in issue between parties. See Section 4(8) RRA.
Where he is of the opinion that a question arising in the proceedings before the Tribunal
involves a substantial question of law, he may, and shall if any party to the proceedings so
requests, adjourn the proceedings and refer that question of law to the High Court for a
decision. See Section 4(9) RRA.
Upon such a decision been given by the High Court, the Tribunal shall dispose of the
proceedings in accordance with that decision. Indeed, it trite law that the Tribunal has the
same jurisdiction and powers in civil matters as are conferred upon the High Court. See Rent
Restriction Tribunal v Rawal Ex parte Mayfair Bakeries Ltd (1985) KLR 167
In addition to the aforementioned, the Tribunal has, amongst others, the following powers
under the Act: See Section 5(1) RRA.
(a) To assess the standard rent of any premises either on the application of any person
interested or of its own motion;
(b) To fix in the case of any premises, at its discretion and in accordance with the requirements
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of justice, the date from which the standard rent is payable;

(c) To apportion payment of the rent of premises among tenants sharing the occupation
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tenancy. ( A composite tenancy means a tenancy comprising more than one dwelling-house
where the tenancy is expressed to be in respect of, or where a single rent is expressed to be
payable in respect of, all those dwellings-houses.)
(d) To fix the amount of service charge where it is part of the rent payable.
(e) To permit the levy of distress for rent.

5. Powers of court.
(1) The tribunal shall have power to do all things which it is required or empowered to do by or under
the provisions of this Act, and in particular shall have power-
(a) to assess the standard rent of any premises either on the application of any person
interested or of its own motion;
(b) to fix in the case of any premises, at its discretion and in accordance with the
requirements of justice, the date from which the standard rent is payable;
(c) to apportion-
i. payment of the rent of premises among tenants sharing the occupation thereof;
ii. the rent payable in respect of different premises included in one composite
tenancy;
(d) where the rent chargeable in respect of any premises includes a payment for water, light,
conservancy, sweeper, watchman, or other service charge in addition to the standard
rent, to fix the amount of such payment or service charge;
(e) where any premises are occupied by tenants who enjoy services in common, such as
water, light, conservancy, sweeper or watchman, to apportion such charges to each of the
tenants;
(f) subject to the provisions of section 14. to make either or both of the following orders-
i. an order for the recovery of possession of premises whether in the occupation of
a tenant or of any other person; and
ii. an order for the recovery of arrears of rent, mesne profits and service charges;
(g) for the purpose of enabling additional buildings to be erected, to make orders permitting
landlords (subject to the provisions of any written law) to excise vacant land out of
premises where such a course is, in the opinion of the tribunal, desirable in the public
interest;
(h) where the landlord fails to carry out any repairs for which he is liable, to order the
landiord to carry out such repairs within such time as the tribunal may stipulate, and, if
the landlord fails to comply with the order, and upon application by notice of mutton by
the tenant, to authorize the tenant to execute the repairs and to deduct the cost thereof
from the rent;
(i) to permit the levy of distress for rent;
(j) to impose conditions in any order made by the tribunal under the provisions of this
section;
(k) on the application by a tenant by notice of motion, to reduce the standard or recoverable
rent of premises where the tribunal is satisfied that the landlord has failed to carry out
such repairs to, or maintenance of. the premises as he has a duty to carry out either by
agreement or under this Act;
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(l) to order a refund of any sum paid by a tenant on account of rent, being a sum
irrecoverable ', the landlord under this Act: Provided that no application may be made
under this paragraph after a period of two years from the date of payment of the sum
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payment;
(m) at any time, of its own motion, or for good cause shown on an application by any landlord
or tenant, to reopen any proceedings in which it has given any decision, determined any
question, or made any order, and to revoke, vary or amend such decision, determination
or order, other than an order for the recovery of possession of premises or for the
ejectment of a tenant therefrom which has been executed: Provided that- (i) nothing in
this paragraph shall prejudice or affect the right of any person under section 8 to appeal
from any such decision, determination or order, or from the revocation, variation or
amendment of any such decision, determination or order; (ii) the powers conferred on
the tribunal by this paragraph shall not be exercised in respect of any decision,
determination or order while an appeal therefrom is pending or in a manner inconsistent
with or repugnant to the decision of the appellate tribunal on such an appeal.
(n) at any time. of its own motion, or for good cause shown on an application by any landlord
or tenant, adjourn an application, or stay or suspend execution of any order of the
tribunal, or postpone the date of possession, for such period or periods and subject to
such conditions with regard to payment by the tenant of arrears of rent or otherwise as
the tribunal thinks fit.
(2) A tribunal may appoint and employ valuers, inspectors, clerks and other staff for the better
carrying out of the provisions of this Act: Provided that, where a tribunal has deputed a valuer,
inspector or other person to inspect or view any premises, any report made by him shall be
communicated to the landlord and the tenant or their representatives.
(3) In respect of premises whereof there is no standard rent or whereof the standard rent does not
exceed two hundred shillings a month the tribunal may from time to time delegate all or any of its
powers under this Act to an administrative officer or any other person, so, however, that no such
officer or other person shall be authorized to assess any standard rent at a sum exceeding two
hundred shillings a month or to vary or amend any decision, determination or order so as to
increase any standard rent to a sum exceeding two hundred shillings a month.
(4) A delegation under subsection (3) may be made in respect of any class or description of premises,
including premises situate in any specified area or place, and may be made with respect to any
premises, or class or description of premises, which may appear to the administrative officer or
other person to be likely to be premises whereof the standard rent does not or will not exceed
two hundred shillings a month; and several delegations may be made so as to be effective at the
same time.
(5) A delegation effected under subsection(3) shall not prejudice or affect the power of the tribunal
itself to exercise any of its powers under this Act in respect of any premises for the time being
affected by the delegation.
(6) Where the tribunal has under subsection (3) delegated any of its powers to any person, that
person shall have power to administer oaths, to order persons to attend and give evidence or to
produce and give discovery and inspection of documents, in the same manner as in proceedings
before the tribunal.
(7) For the purpose of subsection (3), a person occupying those premises in consideration of payment
of rent shall be deemed, for the purposes of this Act, to be a tenant of the person to whom the
rent is paid, and shall be protected by the provisions of this Act, notwithstanding that he shares
the accommodation in those premises with any other person.
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The circumstances under which standard rent under section 5(1) (a) the Act and cited above
would be assessed, were well summarized in the case of J.D. Sumaria & 4 others v
Valbaivaji & Another. Civil Appeal No.192 of 1994 (Unreported).

J.D. Sumaria & 4 others v Valbaivaji & Another. Civil Appeal No.192 of 1994 (Unreported).
The question before the court for determination was whether a party having known the rent of the
premises in question would go to the Tribunal for assessment of the rent. M.A. Ang’awa J in addition
to clearly stating that parties cannot by consent agree on standard rent, proceeded to set out the
circumstances under which the standard rent is assessed as follows:

“The standard rent of premises that is established for a dwelling house is that which was there on the
1st of January 1981. Once this fact is known and established, there is no need to go for assessment of
the standard rent. The standard rent being that which was established on the 1st of January 1981.
There are situations where the standard rent as of 1.1.81 was not known because the premises were
not let then. In such a case, the landlord would apply for the assessment of the rent. The Rent
Restriction Tribunal would then assess the standard rent…. The other situation is when the standard
rent is known but the rents are uneconomical. The Tribunal can reassess the standard rent. The fact
though is, to rely on this request; there must be standard rent first. The landlord has to then show to
the Rent Restriction Tribunal that the rent does not yield “a fair capital return or the costs of return
and market value of land as of 1.1.81.” The landlord has to prove the value of land, the rent he is
getting is uneconomical and the capital is poor.”

The Rent Restriction Tribunal, like the Business Premises Tribunal, is also empowered to
investigate any complaint relating to the tenancy of premises made to it by either a tenant
or the landlord of those premises. See Section 6(1) RRA.

6. Investigation of complaints by the Tribunal.

(1) In addition to any other powers specifically conferred on it by this Act, the tribunal may
investigate any complaint relating to the tenancy of premises made to it by either a tenant or the
landord of those premises.
(2) Any tenant or any landlord making any such com-plaint to the tribunal shall pay such fee as may
be prescribed.
(3) Nothing in this section shall preclude the tribunal from taking cognizance of any infringement of
this Act or of any dispute or matter likely to lead to a dispute between a tenant and a landlord of
which no complaint has been made to the tribunal under the provisions of this Act.
(4) Where a complaint has been made against a tenant or a landlord, or against the agent or servant
of either of them, or where the tribunal has taken cognizance of any dispute or of any facts
which are likely to lead to a dispute between a landlord and a tenant, the tribunal may order the
parties or the landlord or tenant, as the case may be, to appear before the tribunal at a specified
time and place for the purpose of investigating the complaint or dispute.
(5) Where the tribunal investigates any complaint or other matter under this section it may make
such order in the matter, being an order which it is by this Act empowered, to make, as the
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justice of the case may require.

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See Rent Restriction Tribunal v Rawal Ex parte Mayfair Bakeries Ltd,

Rent Restriction Tribunal v Rawal Ex parte Mayfair Bakeries Ltd,
The High Court confirmed that “the powers of the Tribunal are not restricted to those conferred by
section 5 of the Act. Section 6 confers upon it additional powers to investigate any complaints relating to
the tenancy of premises made to it by either a tenant or the landlord of such premises.”

The decision, determination and order of the Tribunal under the Act are conclusive, and no
appeal lies there from to any court save in the following instances where the appeal lies to
the High Court: See Section 8 (1) & (2) RRA.

(a) In the case of an order under section 6(5) made by the Tribunal having investigated a
complaint; or
(b) On any point of law; or
(c) In the case of premises whereof the standard rent exceeds one thousand shillings a month,
on any point of mixed fact and law.

8.Appeals
(1) Except as provided by subsection (2), every decision, determination and order of the tribunal
under the provisions of this Act shall be final and conclusive, and no appeal shall lie therefrom to
any court.
(2) An appeal shall lie to the High Court from any such decision, determination or order in the
following cases-
(a) in the case of an order under subsection (5) of section 6; or
(b) on any point of law; or
(c) in the case of premises whereof the standard rent exceeds one thousand shillings a
month, on any point of mixed fact and law, and for the purposes of this subsection, the
determination of any rent or of any sum shall be a matter of fact.
(3) Any person who is aggrieved by any decision, determination or order of a person acting under
powers delegated to him under subsection (3) of section 5 may apply to the tribunal for a review
of that decision, determination or order, and the tribunal may make such order thereon as it
thinks fit.
(4) No appeal shall lie from the determination of an appeal given under subsection (2), or an order
of the tribunal given under subsection (3), of this section.

Thus, unlike under the Landlord & Tenant Act (Cap 301) where it has been held that there
are no appeals available to the High Court from an order of the Tribunal having investigated
a complaint, the same is not true of the Rent Restriction Act.
Under the latter, it is express that an appeal lies to the High Court where a party feels
aggrieved by order of the Tribunal having investigated a complaint. Indeed, as was held in
Rent Restriction Tribunal v Rawal Ex parte Mayfair Bakeries Ltd, there is nothing in the Act
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that shows of two categories of complaints i.e. minor and major complaint, as has been the
case in the Landlord & Tenant Act (Cap 301).
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No further appeal lies from the decision of the High Court under the Act. See Savings & Loan
Kenya Ltd. v Odongo (1987) KLR 294; and Cheema v Rodrigues (No. 2) (1984) KLR 788.
It is further provided that where any person is aggrieved by any decision, determination or
order of a person acting under powers delegated to him under section 5(3); he may apply to
the Tribunal for a review of that decision. However, no further appeal shall lie from such a
review.
Section 10 to 14 of the Act relate to the limitation of increases of rent by the landlord.
In particular, section 11 states that the landlord can only increase rent by notice in writing to
the tenant and a copy thereof delivered to the Tribunal.
Section 14 provides the conditions under which an order for recovery of any premises or for
the ejectment of a tenant can be made. See Kimani v Republic (1989) KLR 382.

Kimani v Republic (1989) KLR 382.

it was emphasized that possession may not be by a landlord recovered unless the notice given is given
for one of the reasons set out in one of the subsections of section 14(1) of the Act. Where the notice is
given pursuant to a wrong section of the Act, the notice is not rendered invalid unless substantial
prejudice has been occasioned to the tenant by the mistake.

In Cheema v Rodrigues, (1984) KLR 782.

Cheema v Rodrigues, (1984) KLR 782.

The appellant/landlord filed a suit in the Rent Restriction Tribunal seeking the eviction of the
respondent/tenant on the ground that he (the landlord) needed to give his family occupation of the
premises occupied by the respondent. The appellant gave the respondent a notice to vacate which was
stated to be given under section 15(1) (h) instead of 15(1) (e) of the Rent Restriction Act. The Tribunal
decided that the notice had a fundamental defect and was not valid. On appeal it was held that the
mention of section 15(1)(h) of the Rent Restriction Act did not cause any prejudice and it was wrong for
the Tribunal to take it upon itself to hold the notice invalid without affording an opportunity to the
plaintiff’s/appellant’s counsel to deal with the matter.

In the event that the landlord issues a notice pursuant to section 14(1) (i) on the ground that
he wishes to reconstruct the premises, it has been held that provided such a landlord has
proved a fixed and genuine intention to reconstruct premises to better and higher
standards, then he should be given the chance to do so and the mere fact that his tenant is
not likely to obtain alternative accommodation should not be a reason enough to hinder the
development. See Lakhani v Nyanza Woolen Shop (1991) KLR 597.
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ASSIGNMENTS

Definition of Assignment

The transfer of the whole of the interest of a lessor or lessee under a lease to a third party.
Takes place when a third party takes the identical term which the lessor or lessee holds in
respect of a leasehold interest.
(a) Assignor – the person who makes the assignment.
(b) Assignee – the person to whom an assignment is made.

The whole interest must be transferred.

i. The lessor must assign the whole of his interest including the reversion.
ii. The lessee must assign the whole of his term.
iii. If there is a remainder of the term, the whole remainder must be assigned.
iv. There would be no assignment if the assignor were to reserve a part of the term for
himself

An assignee can therefore be:

i. A third party to whom the lessor passes the reversion; or
ii. A third party to whom the lessee passes the term of years.

Privity of Contract and Privity of Estate

Assignment raises the question as to whether or not covenants or agreements; implied or
expressed in a lease retain their effect after the original Lease has been assigned to a third y
by either the lessor or lessee.
The answer to the above question is determined by the common law doctrines of privity
contract and privity of estate. See Souza Figuerido v. Panagopolous [1959] EA 756

Souza Figuerido v. Panagopolous [1959] EA 756

This case concerned an unregistered lease (under R T A) of club premises.
Held: An unregistered lease cannot create any interest, right or confer any estate which is valid against
third parties, but that the unregistered lease operates as a contract inter partes which can be
specifically enforced.

This case discusses privity of contract and privity of estate.

a) Privity of Contract
It exists between people who have entered into contractual relations - i.e. where there is an
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agreement between the parties, e.g. between Landlord and Tenant, Tenant and Subtenant.
Under the doctrine of privity of contract, only the contracting. parties can sue or be sued on
the contract.
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b) Privity of Estate
It exists between two people, one of whom holds the reversion while the other holds the
original term or remainder of the term created by the lease. It exists e.g. between: Landlord
and Tenant's Assignee.
In the absence of an assignment, the law states that there is both privity of contract and of
estate.
At common law, privity of contract between a landlord and tenant subsists even after
assignment of their respective interests.
Liabilities do not pass to the assignee.
The ITPA repeats the common law rule. It provides that upon assignment (transfer) the
Lessor or Lessee shall not cease to be subject to any of the liabilities imposed upon him by
the lease.
See:
i. S. 108- (B)(j) - which allows a Lessee to assign his interest.
ii. S. 109 - which allows a Lessor to assign his interest.
The RLA, however, reverses the Common Law and ITPA rule.
S 91 provides that a transferee From a lessor or from a lessee shall possess all the rights and
be subject to all the liabilities of the lessor of lessee which are expressed of implied in the
lease or which arise thereunder further, the transferor shal1 cease to be under any
obligation or possessed of any rights in respect of the lease.
S.85(1) allows- a lessee to transfer his interest. The word used is "transfer", not
"assignment.”
Proviso Nothing in this section shall affect the rights of liabilities of the lessor or lessee in
respect of a breach of any of the agreements expressed or implied in the lease which
occurred before the transfer.

TRANSFER AND ASSIGNMENT UNDER NEW LAND ACT 2012

Transfer- passing of lease from one party to another

Assignment- transfer of rights to the leased property. The assignee acquires the same rights
as the assignor.
Effect of the two is more or less the same.
The subject of transfer or assignment is the interest held in the lease and the reversion.
The transferee(new lessor) becomes entitled to the rights and obligations of the
transferor(old lessor) see Section 69 LA
Lessee must be notified of transfer otherwise if he pays rent to the old lessor he is
considered to have met his obligations. Registration of transfer alone does not satisfy the
requirement of notice –See Section 70 LA
The assignor/transferor is discharged from the rights and obligations of the lease from date
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of transfer/assignment unless he remains in possession. See Section 71 LA

If lessee vacates the land before the termination of lease he shall remain liable to perform
all obligations including payment of rent for the next 1year unless the lease provides for a
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year.(under common law the lessee would be liable for the remainder of the term.
Transferee or assignee becomes the lessee and observes the covenants of the lease. See
Section 72

Transfer and Assignment of Leases

69. Burden and benefit of covenants to run with the reversion.
(1) If the interest held by the lessor under a lease, the reversion, ceases to be so held by the lessor,
whether by transfer, assignment, grant, operation of law or otherwise then, unless a contrary
intention, expressly or impliedly, appears from the lease, or from any other circumstance—
(a) the obligations imposed on the lessor by covenant of the lease run with the reversion
and may be enforced by the person who is from time to time entitled to the reversion;
(b) the rights to the benefits of every covenant imposed on the lessee, that refers to the
subject matter of the lease, may be exercised and enforced by the person who is from
time to time entitled to the reversion against the person who is from time to time
entitled to the lease.
(2) A person who becomes entitled to exercise a right to which subsection (1) (b) refers may exercise
the right even if it first became exercisable or accrued before the time at which that person
became so entitled unless before that time, the right was waived or the lessee was released from
the obligation to which the right relates.
(3) If, in respect of a lease—
(a) there has been a division of the reversion into different parts so that different persons
are lessors of the different parts; or
(b) the lease has terminated in relation to the part of the land comprised in the lease, the
obligations referred to in subsection (1)(a) and the rights and remedies referred to in
subsection (1)(b) shall be apportioned, and to the extent required by that
apportionment, remain attached to each part of that reversion or to that part of the land
in respect of which the lease has not been terminated as the case may require and may
be enforced by the person entitled to enforce those obligations under subsection (1)(a)
and exercised by the person entitled to exercise those rights and remedies under
subsection (1)(b).

70. Effect of payment by lessee to assignor of reversion.

(1) If a lessor has transferred or assigned the reversion, any payment by the lessee of any part of the
rent or of any other money due under the lease to the transferor or assignor shall discharge the
lessee to the extent of that payment unless the lessee had actual notice of the transfer or
assignment before making the payment.
(2) Notwithstanding any other provision to the contrary in any other written law, the registration of
a transfer of the reversion shall not, for purposes of subsection (1), in itself, be an actual notice
to the lessee of the transfer.

71. Transferor or assignor of lease released from liability to pay rent and observe covenants thereafter.
(1) In respect of any lease or any transfer or assignment of a lease or part of it made or coming into
effect on or after the date of the commencement of this Act,—
(a) the rule of the common law that a transferor or assignor of a lease remains liable on the
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personal covenant to the lessor for payment of rent and for all breaches of covenants,
notwithstanding that the transferor or assignor is no longer in possession or occupation
of the leased land, shall cease to apply; and
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(b) the effect of a transfer or assignment of a lease is, as from that date, to discharge

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absolutely and without more the transferor or assignor from any obligation to pay rent
or to observe any covenants in respect of the land as from the date of the transfer or
assignment, whether the person to whom the lease has been transferred or assigned is
in or goes immediately into occupation or possession of the land so transferred or
assigned.
(2) As long as the transferor or assignor remains in occupation of the leased land and
notwithstanding the transfer or assignment, that transferor or assignor shall remain liable to pay
rent and comply with all the covenants as if the person were still the lessee for as long as the
person shall remain in occupation.
(3) Subsection (1) shall not absolve a transferor or assignor of a lease from any obligation to pay rent
or remedy and breach of a covenant that accrued or arose during the term of the lease when
that transferor or assignor was bound by all the covenants in that lease and the lessor may
enforce all such obligations of that lease that have so accrued or arisen against that transferor or
assignor notwithstanding that the lease has been transferred or assigned.
(4) As from the date of the commencement of this Act—
(a) The rule of common law that a lessee remains liable to pay rent and comply with all the
covenants notwithstanding that the lessee has, with the agreement of the lessor,
vacated the leased land before the date for the termination of the lease, shall cease to
apply; and
(b) Subsection (5) shall forthwith apply.
(5) A lessee who, with the agreement of the lessor, vacates land before the termination of a lease
shall remain liable to pay rent and observe all the covenants in the lease for one year from the
date on which the lessee vacates the land or buildings, unless the lease provides expressly for a
shorter period, and if the lessor leases that land or any buildings to another person before the
end of one year, the provisions of subsection (1) shall apply, with effect from the date of the
execution of that lease.
(6) Subsection (1) shall not absolve a lessee to whom subsection (5) applies, from any obligation to
pay rent or remedy a breach of a covenant that accrued or arose during the term of the lease
when that lessee was bound by all the covenants in that lease and the lessor may enforce all
such obligations of that lease that have accrued or arisen against that lessee notwithstanding the
fact that the lessee has vacated the land.
(7) The provisions of subsections (1) and (5) shall apply in a similar manner to the transfer, or
assignment of a lease of a part of the leased land and to the vacating of a part of the leased land
as they apply to the transfer of assignment of the lease of all the land and the vacating of all the
land comprised in the lease.
(8) Any term expressed or implied in a lease or in a condition or covenant in a lease that is in conflict
with this section shall be void .
72. Transferor or assignee as lessee
(1) A person who accepts a transfer or assignment of a lease shall become the lessee and shall not
be required to—(a) acknowledge the lessor as such ;(b) take possession of the land or building
that is the subject of the lease.
(2) A person to whom this section applies who becomes a lessee—
(a) shall pay the lessor the rent payable under the lease;
(b) shall observe and perform all the covenants on the part of the lessee expressed or
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implied in the lease; and

(c) may enforce all covenants made by and binding on the lessor expressed or implied in the
lease.
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REGISTRATION OF LEASES AND EFFECT OF NON-REGISTRATION

Leases of more than 2 years should be registered. See Section 58 LA

58. Short-term leases.

(1) A short term lease is a lease—
(a) made for a term of two years or less without an option for renewal ;
(b) that is a periodic lease; and
(c) to which section 57(2) applies.
(2) A short term lease may be made orally or in writing.
(3) A short term lease is not a registrable interest in land.

After registration of lease with a requirement for consent of lessor no dealing will be
registered until consent of lessor. See Section 54 LRA

54. Registration of Leases.

(1) Upon the registration of a lease containing an agreement, express or implied, by the lessee that
the lessee shall not transfer, sub-let, charge or part with possession of any of the leased land
leased without the written consent of the lessor, the agreement shall be noted in the register of
the lease, and no dealing with the lease shall be registered until the consent of the lessor,
verified in accordance with this Act has been produced to the Registrar.
(2) The Registrar, upon receipt of adequate proof, may dispense with the consent of the lessor
(a) where satisfactory evidence is given to the registrar and the Registrar is satisfied that
the lessor is dead and that there is no personal representative of the lessor; or
(b) if the Registrar considers that the consent of the lessor or the personal representative,
as the case may be, cannot be obtained or that it can only be obtained with difficulty or
at an unreasonable expense and shall, after making such enquiries as the Registrar may
consider necessary in the circumstances, record on the document his or her reasons for
dispensing with the consent and note as such in the register.
(3) The registration of interests in land under the law relating to sectional properties shall be
carried out in the manner prescribed under that Act.
(4) The land register maintained under section 7 of this Act shall be deemed to be the land register
for purposes of the Sectional Properties Act.
(5) The Registrar shall register long-term leases and issue certificates of lease over apartments,
flats,maisonettes, townhouses or offices having the effect of conferring ownership, if the
property comprised is properly geo-referenced and approved by the statutory body responsible
for the survey of land.

No certificate of lease shall be issued unless the lease is for a certain period exceeding 25
years. See Section 30 LRA

30. Certificate of title and Certificate of lease.

(1) The Registrar may, if requested by a proprietor of land or a lease where no certificate of title or
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certificate of lease has been issued, issue to him or her a certificate of title or a certificate of
lease, as the case may be, in the prescribed form showing, if so required by the proprietor, all
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(2) Notwithstanding subsection (1)-

(a) only one certificate of title or certificate of lease shall be issued in respect of each parcel
or lease; and
(b) no certificate of title or certificate of lease shall be issued unless the lease is for a
certain period exceeding twenty-five years.
(3) A certificate of title or certificate of lease shall be prima facie evidence of the matters shown i n
the certificate, and the land or lease shall be subject to all entries in the register.
(4) If there is more than one proprietor, unless they are tenants in common, the proprietors shall
agree among themselves on which of them shall receive the certificate of title or the certificate
of lease, and if they fail to agree, the certificate of title or the certificate of lease shall be filed in
the registry.
(5) The date of issue of a certificate of title or certificate of lease shall be noted in the register.

The registrar shall note the disposition on the original and duplicate lease or charge. See
Section 32 LRA

32. Dispositions of leases and charges.

On the registration of any disposition of a lease or charge, the original and the duplicate of the lease or
charge shall, unless the Registrar is satisfied that they cannot be produced, be produced to the
Registrar, who shall note particulars of the disposition on the lease or charge and on the duplicate.

Title to land may be acquired through a long term lease exceeding 21 years. See Section 7 LA

7. Methods of acquisition of title to land.

Title to land may be acquired through—
(a) allocation;
(b) land adjudication process;
(c) compulsory acquisition;
(d) prescription;
(e) settlement programs;
(f) transmissions;
(g) transfers;
(h) long term leases exceeding twenty one years created out of private land; or
(i) any other manner prescribed in an Act of Parliament.

WHAT IS THE EFFECT OF NON-REGISTRATION OF A LEASE?

No instrument affecting any disposition of private land under this Act 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. See Section 43(2) LRA.
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43. Instruments of dispositions.

(1) Every instrument effecting a disposition of land under this Act shall be in the form prescribed in
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relation to that disposition under this Act or any other written law.

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(2) No instrument effecting any disposition of private land under this Act shall operate to sell or
assign land or create, transfer or otherwise affect any land, lease or charge until it has been
registered in accordance with the laws relating to the registration of instruments affecting the
land in respect of which the disposition has been made.
(3) The provisions of subsection (2), shall not apply to any disposition that is exempt from
registration.
(4) This section shall not apply to or affect the operation of any contract for a disposition under this
Act.

Unregistered instruments shall be construed as contracts. See Section 36(2) LRA

36. Dispositions and dealings affecting land.

(1) A lease, charge or interest in land shall not be disposed of or dealt with except in accordance
with this Act, and any attempt to dispose of any lease, charge or interest in land otherwise than
in accordance with this Act or any other law, shall not, extinguish, transfer, vary or affect any
right or interest in that land, or in the land, lease or charge.
(2) Nothing in this section shall be construed as preventing any unregistered instrument from
operating as a contract.
(3) The Cabinet Secretary may prescribe terms and conditions of sale, which––
(a) shall apply to contracts by correspondence, subject to any modification or any
stipulation or any intention to the contrary expressed in the correspondence; and
(b) may be made to apply to any other cases for which the terms and conditions are made
available, where express reference is made to those terms and conditions.
(4) Subject to Article 67(2)(c) of the Constitution, the Cabinet Secretary shall make regulations
prescribing the time within which instruments presented for registration must be registered and
providing for the supervision of the registration process to achieve the objectives of efficiency,
transparency and good governance.

Registration of Documents Act requires registration of leases and licenses of over 1 year. See
Section 4 of RDA

4. Documents to be registered.

All documents conferring, or purporting to confer, declare, limit or extinguish any right, title or interest,
whether vested or contingent to, in or over immovable property (other than such documents as may be
of a testamentary nature) and vakallas shall be registered as hereinafter prescribed:
Provided that the registration of the documents following shall not be compulsory-
i. any composition deed;
ii. any document relating to shares in a joint stock company, notwithstanding that the assets of
such company consist in whole or in part of immovable property;
iii. any debenture issued by such a company, and not creating,declaring, assigning, limiting or
extinguishing any right, title or interest to, in or over any immovable property, except in so far
as it entitles the holder to the security afforded by a registered instrument, whereby the
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company has mortgaged, conveyed or otherwise transferred the whole or part of its immovable
property, or any interest therein, to trustees upon trust for the benefit of the holders of such
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debentures;

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iv. any endorsement upon or transfer of any debenture issued by any such company;
v. any document not itself creating, declaring, assigning, limiting or extinguishing any right, title or
interest to, in or over any immovable property but merely creating a right to obtain another
document, which will, when executed, create, declare, assign, limit or extinguish any such right,
title or interest;
vi. any lease or licence of land for any term not exceeding one year; or
vii. any document registrable under the provisions of the Government Lands Act, the Registration
of Titles Act, the Land Titles Act or the Registered Land Act:
Provided that; if any such document relates to land registrable under any such Act and also to land not
so registrable, such document shall also be registered under this Act.

See these two cases

James Michiki Mwangi & Ano. Vs. esther Wanjiru Kabugu & Ano (2006) eKLR
Lease for 5 years 1 month not registered. Walsh V Londsdale (1882)21 Ch.D quoted (where a tenant
holds under an agreement for a lease equity regards him as holding a lease). The tenant continued in
occupation after expiry of term and landlord accepted rent. S 52 RLA provided that acceptance of rent
was evidence of consent to continue in occupation

Bachelor’s Bakery Ltd V Westlands Securities Ltd Civ Appeal No.2 of 1978.
Lease of shop was for 6 years and was unregistered. Upon its expiry the landlord sought possession. It
was held that it was not a protected tenancy as there an unexecuted lease for more than 5 years which
created a tenancy and did not require to be registered under ITPA S107

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LECTURE 11: FRIDAY 19 AUGUST-2 SEPTEMBER 2016- MORNING SESSION

(LECTURE HALL A)

TOPIC 11: CHARGES & MORTGAGES

The student should be able to make and obtained all searches and consents required by law
and good practice.
The student should be able to draft, peruse and advised, on the contents of a charge
instrument to create or release a security, reflecting the agreement between the Chargee
and the Chargor and protecting their respective interests.

INTRODUCTION

Most people don’t have the money developers ask for or security. When you approach a
financier they use the property you are buying which would serve as good security. Some
also insist on an assignment of income and profits in your property.
As such in Kenya majority of sale transactions are mortgage financed or financed by financial
institutions.
Charges and mortgages will relate to land and they are the interest that banks use to finance
projects that involve land i.e. development projects. The document created to secure the
interest is the mortgage or the charge

UNDER THE OLD LAND REGIME

Mortgages and Charges are borrowing commercial transactions whereas mortgages apply to
such transactions created under the ITPA charges are a feature of similar transactions
carried out pursuant to the provisions of the RLA to the extent that the obligations and
duties created restrict the powers of the registered proprietor from dealing freely with his
property.
Transactions in mortgages and charges amount to burdens on land or on property offered as
security and in especially a capitalist economy they have assumed great significance as a way
of accessing credit facilities from financial institutions or with the help each property owner
may develop their properties using their titles as security in consideration for the loan or
credit advanced.
The transactions involved require that property owners desirous of accessing funds
approach financial institutions who are willing to accommodate them financially to a certain
level agreeable on the footing of security to be offered by property owners in the form of
the titles that they hold.
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Equitable Mortgage Equitable Charge Legal Mortgage Legal Charge

Regime GLA/LTA GLA/LTA/RTA ITPA RLA/RTA/ITPA
Definition Mortgage created on the Charge created on the basis of a S58 (a) defines it as the S100 ITPA- a charge does not effect
basis of a contract by the contract by the proprietor to transfer of an interest in any transfer of interest in the property
proprietor to transfer a transfer a proprietary interest by specific moveable property for but the land is basically designated as
proprietary interest by way way of security to the lender the purpose of securing the security for the debt.
of security to the lender. payment of money advanced
or to be advanced by way of Distinction
loan. Whereas a charge only gives rights to
payment of a particular fund or
i.e. a conditional assignment or property without transferring that
conveyance of interest in land fund or property a mortgage is in
as security for repayment of a essence a transfer of an interest in
debt, which assignment or specific immoveable property.
conveyance may become
absolute if the borrower
defaults
Creation Can be created minus any Created by registering a formal
legal deeds being perfected. memorandum of deposit of title as
A simple informal memo provided for under the equitable
accompanied with a deposit mortgages Act. The intent is to
of original title deeds will create a legal mortgage or security
suffice must be there.

Note- land registered under the GLA and LTA will create a Mortgage, while under the RLA and RTA a charge will be created.

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DEFINITION OF A CHARGE

Both Section 2 of Land Act and Section 3 of Registered Land Act (repealed)- Defines a
charge as an interest in land securing the payment of money or money’s worth or the
fulfilment of any condition and includes a sub-charge and the instrument creating a charge.

Registered Land Act Cap 300 (Now Repealed)

Section 3

“charge” means an interest in land securing the payment of money or money’s worth or the fulfilment of
any condition, and includes a sub-charge and the instrument creating a charge;

“chargee” means the proprietor of a charge;

“chargor” means the proprietor of charged land or of a charged lease or charge;

Land Act 2012

Section 2

“charge” means an interest in land securing the payment of money or money’s worth or the fulfillment
of
any condition, and includes a sub-charge and the instrument creating a charge, including –
(a) an informal charge, which is a written and witnessed undertaking, the clear intention of
which is to charge the chargor’s land with the repayment of money or money’s worth
obtained from the chargee; and
(b) a customary charge which is a type of informal charge whose undertaking has been
observed by a group of people over an indefinite period of time and considered as legal
and binding to such people;

Simply put- security for loan with an undertaking for repayment. It confers certain rights to
the Chargee from the Chargor

Section 46 Registration of Titles Act (RTA) Cap 281 (Repealed) advance of security by lender
against a registered charge. The substantive law- Section 100 A of Indian Transfer of
Property Act (ITPA) (Repealed) which equates a legal charge under Section 46 RTA to the
English legal mortgage

Registered Titles Act (RTA) CAP 281 (Repealed)

46. Form of charge.

(1) Whenever any land is intended to be charged or made security in favour of any person other
than by way of deposit of documents of title as provided for by section 66, the proprietor or
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lessee or, if the proprietor or lessee is of unsound mind, the guardian or other person appointed
by the court to act on his behalf in the matter shall execute a charge in form J (1) or J (2) in the
First Schedule, which must be registered as hereinbefore provided.
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(2) The charge when registered shall (subject to any provisions to the contrary therein contained)

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render the property comprised therein subject to the same security, and to the same powers and
remedies on the part of the chargee, as are the case under a legal mortgage of land which is not
registered under this Act.
Indian Transfer of Property Act (ITPA) –(Repealed)

100A-Charges; and equitable mortgagor and charges by deposit.

(1) A chargee under a charge executed in accordance with the provisions of section 46 of the
Registration of Titles Act and duly registered under that Act shall have the same rights, powers
and remedies (including the right to take proceedings to obtain possession from the occupiers
and the persons in receipt of rent and profits, or any of them) as if the charge were an English
mortgage to which section 69 of this Act applies.
(2) All the provisions of this Act with respect to the rights, powers or remedies, or the duties,
liabilities or obligations, of mortgagors, or mortgagees, shall, except in so far as the contrary
intention is expressed or implied, apply not only to mortgagors, or mortgagees, under the forms
of mortgage specified in section 58 of this Act but also to mortgagors, or mortgagees, or, as the
case may be, chargors, or chargees, under –
(a) charges executed in accordance with the provisions of section 46 of the Registration of
Titles Act, attested and certified in accordance with the provisions of subsection (4) of
section 69 of this Act and duly registered under the said Act; and
(b) equitable mortgages by deposit of documents of title, duly protected by registration of a
memorandum thereof under the Government Lands Act or the Land Titles Act; and
(c) charges by deposit of documents of title, duly protected by registration of a
memorandum thereof under the Registration of Titles Act,and references in any such
provision to a mortgage, mortgage-deed or mortgage instrument, or to mortgaged
property, or to mortgage-money or a mortgage debt, or otherwise in relation to
mortgages, shall be construed accordingly.

Under Section 65 &84 Registered Land Act - A charge operates as security but not a
transfer. See Section 65 (4). It was the only form of security.

Registered Land Act Cap 300

65. Form and effect of charges.
(1) A proprietor may, by an instrument in the prescribed form, charge his land, lease or charge to
secure the payment of an existing or a future or a contingent debt or other money or money’s
worth or the fulfilment of a condition, and the instrument shall, except where section 74 has by
the instrument been expressly excluded, contain a special acknowledgement that the chargor
understands the effect of that section, and the acknowledgement shall be signed by the chargor
or, where the chargor is a corporation, by one of the persons attesting the affixation of the
common seal.
(2) A date for the repayment of the money secured by a charge may be specified in the charge
instrument, and where no such date is specified or repayment is not demanded by the chargee
on the date specified the money shall be deemed to be repayable three months after the service
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of a demand in writing by the chargee.

(3) The charge shall be completed by its registration as an encumbrance and the registration of the
person in whose favour it is created as its proprietor and by filing the instrument.
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(4) A charge shall not operate as a transfer but shall have effect as a security only.

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(5) There shall be included, in an instrument of charge securing the fulfilment of a condition or the
payment of an annuity or other periodical payment not of the nature of interest on a capital sum,
such provisions as the parties think fit for disposing, subject to section 78, of the money which
may arise on the exercise by the chargee of his power of sale, either by setting aside the
proceeds of sale or part thereof and investing it to make the future periodical payments, or by
payment to the chargee of such proceeds or part thereof to the extent of the estimated capital
value of the chargee’s interest, or otherwise.

84. Consolidation.
A chargee has no right to consolidate his charge with any other charge unless the right is expressly
reserved in the charges or in one of them and is noted in the register against all the charges so
consolidated.

See also Section 80(1) Land Act - Charge to operate as security only and not as a transfer of
any interest or rights in land

80. Charge of land to take effect as security only.

(1) Upon the commencement of this Act, a charge shall have effect as a security only and shall not
operate as a transfer of any interests or rights in the land from the chargor to the chargee but
the chargee shall have, subject to the provisions of this Part, all the powers and remedies in case
of default by the chargor and be subject to all the obligations that would be conferred or implied
in a transfer of an interest in land subject to redemption.
(2) In the case of the charge of a lease, the chargee shall not be liable to the lessor for rent or in
respect of the covenants and conditions contained or implied in the lease to any greater extent
than would have been the case if the charge had been by way of a sublease.
(3) Every charge instrument shall contain-
(a) The terms and conditions of sale;
(b) An explanation of the consequences of default; and
(c) The reliefs that the chargor is entitled to including the right of sale.

In laymen terms a charge is also a security for money advanced, the property is neither
conveyed nor transferred to the lender/bank. In the case of a charge, the interest will
only be conveyed to the lender in a very legal and abstract way after you have defaulted.

DEFINITION OF MORTGAGE

ITPA defines a mortgage as

o “the transfer of an interest in specific immovable property for the purpose of

securing the payment of money advanced or to be advanced by way of loan, an
existing or future debt or the performance of an engagement which may give rise to
a pecuniary liability”
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Deals with transfer of interest as security for loan advanced. Transferor of interest=
mortgagor while transferee= mortgagee. The sum of money over which interest is advanced
is known as the mortgage sum.
Though the transaction is between two parties- mortgagor and mortgagee, a 3rd party called
a guarantor or a head lessor may be involved, the latter to give consent to assignment or
sublease of a leasehold interest as security for loan.
This is the conditional transfer of property to a lending institution or bank which transfer
may become absolute if the borrower falls into arrears or is completely unable to make
payments as per the covenants between the bank/lending institution.
See Section 58 (a) of the ITPA

58. Of Mortgages of Immovable Properties and Charges

(a) A mortgage is the transfer of an interest in specific immovable property for the purpose of
securing the payment of money advanced or to be advanced by way of loan, an existing or
future debt, or the performance of an engagement which may give rise to a pecuniary liability.
The transferor is called a mortgagor, the transferee a mortgagee; the principal money and
interest of which payment is secured for the time being are called the mortgage-money, and the
instrument (if any) by which the transfer is effected is called the mortgage-deed.(Mortgage”,
“mortgagor”, “mortgagee”, “mortgage-money” and “mortgage-deed” defined.)

(b) Where, without delivering possession of the mortgaged property, the mortgagor binds himself
personally to pay the mortgage-money, and agrees, expressly or impliedly, that, in the event of
his failing to pay according to his contract, the mortgagee shall have a right to cause the
mortgaged property to be sold and the proceeds of sale to be applied, so far as may be
necessary, in payment of the mortgage-money, the transaction is called a simple mortgage and
the mortgagee a simple mortgagee.( Simple mortgage defined)

(c) Where the mortgagor ostensibly sells the mortgaged property-

on condition that on default of payment of the mortgage-money on a certain date the sale shall
become absolute, or

on condition that on such payment being made the sale shall become void, or

on condition that on such payment being made the buyer shall transfer the property to the
seller, the transaction is called a mortgage by conditional sale and the mortgagee a mortgagee
by conditional sale.(Mortgage by conditional sale defined)

(d) Where the mortgagor delivers possession of the mortgaged property to the mortgagee, and
authorizes him to retain such possession until payment of the mortgage-money, and to receive
the rents and profits accruing from the property and to appropriate them in lieu of interest, or
in payment of the mortgage-money, or partly in lieu of interest and partly in payment of the
mortgage-money, the transaction is called an usufructuary mortgage and the mortgagee an
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usufructuary mortgagee. (Usufructuary mortgage defined)

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(e) Where the mortgagor binds himself to repay the mortgage-money on a certain date, and

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transfers the mortgaged property absolutely to the mortgagee, but subject to a proviso that he
will retransfer it to the mortgagor upon payment of the mortgage-money as agreed, the
transaction is called an English mortgage. (English Mortgage defined)

The case of Santley vs. Wilde[1899] 2 Ch 474

Santley vs. Wilde[1899] 2 Ch 474

The Master of Rolls Lindley “A mortgage is a conveyance of land as security for payment of a debt or the
discharge of some other obligation for which the land had been given.” You actually „convey‟ your
interest in a mortgage.

Nature of Mortgage

Conveyance or transfer of interest in land or other properties; this could be legal or

equitable interest depending on the mode of creating the mortgage or the nature of the
interest that the mortgagor has in the property.
Consideration from the mortgagee to mortgagor in terms of loan
Conveyance or transfer is not absolute- i.e. subject to cesser or redemption upon payment
of loan.
Both mortgagor and mortgagee have mutual rights of action.

Distinction between Mortgage and Charge

Mortgage Charge
This is the conditional transfer of property to a On the other hand while a charge is also a security for
lending institution or bank which transfer may money advanced, the property is neither conveyed
become absolute if the borrower falls into nor transferred to the lender/bank. In the case of a
arrears or is completely unable to make charge, the interest will only be conveyed to the
payments as per the covenants between the lender in a very legal and abstract way after you have
bank/lending institution. defaulted.
Mortgage- conveyance or assignment of land Charge-confers rights to chargee to enable him
with proviso for re-conveyance or reassignment recover money plus interest. See RLA S 3, LA S2 No
transfer but security exists. It is only an
encumbrance on the title.
Mortgagor says “take my land until I pay you” Chargor says “give me the money if I fail to pay, take
my land”.
S 65(4) RLA a charge shall not operate as a transfer
but shall have the effect as security only.
Charge is regarded as a species of a mortgage.
S46 RTA, S100 ITPA- Create charge.
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DIFFERENT TYPES OF MORTGAGES

Section 58 of the ITPA (Repealed) creates forms of mortgages but for a charge there is
only one legal form:

(1) Simple Mortgage

See Section 58 (b) of the ITPA
the mortgagor does not deliver possession but bids himself to pay the mortgage money
and that if he fails to pay according to the agreement, the lender will cause the property
to be sold and the proceeds used to pay off
Simply put no delivery of possession but mortgagor binds himself to pay or the
property will be sold

(2) Mortgage by Conditional Sale

See Section 58 (c)
The mortgagor sells the property to the mortgagee on condition that the sale will
become absolute upon default.

(3) Usufructuary mortgage

See Section 58 (d)
i.e. you actually deliver possession of the property
The mortgagor delivers possession to the lender and authorizes him to retain possession
until repayment in full and to receive rents and profits and apply them to the payment
of interest or the principle or the interest and the principle.
Possession is delivered with authority to retain it until payment; the mortgagee also
obtains rights to secure rent and profits to repay.

(4) Anomalous Mortgage

See Section 95
Anomalous mortgage. Hybrid mortgage or where a mortgage is none of the ones set out
above e.g. Islamic Mortgage – bank buys the property and the borrower still occupies it
as a tenant as he pays rent towards the loan.

95. Charge of one of several co-mortgagors who redeems.

Where one of several mortgagors redeems the mortgaged property and obtains possession thereof, he
has a charge on the share of each of the other co-mortgagors in the property for his proportion of the
expenses properly incurred in so redeeming and obtaining possession.
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(5) English Mortgage/ Legal Mortgage

See Section 58 (e)
Also known as Legal Mortgage
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This is the most common form of mortgage

The mortgagor deliver property to the lender who takes it absolutely with the mortgagor
binding himself to repay the money borrowed by a certain date subject to the proviso
that on full repayment the lender will transfer the property back to the mortgagee.
In other words Mortgagor transfers property to the mortgagee with a proviso that upon
payment of the mortgage money the latter returns it.( the best form and most popular)
Form of security under GLA and LTA whose substantive law

(6) Equitable Mortgage

Creature of Equity
Traditionally there are 4 ways of creation of equitable mortgages

i. By deposit of title

ii. Where money has been advanced and the mortgagee agrees to execute a
legal mortgage

iii. If the estate or interest is equitable

iv. Written memorandum identifying the property and indicates intention to

charge property.

Equitable Mortgages Act(cap 291) recognizes the creation of mortgage by delivery of

title
S100(2)(g) of ITPA also recognizes them
S66 of RTA also allows for equitable charges by deposit of title
No equitable charges in RLA since it is the register that is prima facie evidence of the
matters therein (s32(2) RLA, RTA S23 certificate of Title is conclusive evidence of
ownership(s23(1)RTA)
See Barclays Bank DCO vs. Gulu Millers (1959)EA 540

Barclays Bank DCO vs. Gulu Millers (1959)EA 540

In Kenya equitable mortgages are statutory, but the equitable doctrines of England with regard to this
type of security can be invoked to fill in the gaps where the Kenyan law is lacking.

In this case on appeal from Uganda that under the doctrines of equity where there was an equitable
mortgage by deposit of documents of title accompanied by a memorandum by the deposit or
agreement to execute a legal mortgage with unqualified power of sale, the Court had power to order a
sale and also foreclosure.

The respondent company had deposited with the appellant bank certain documents of title to leasehold
land at Gulu and had at the same time executed a memorandum of deposit of documents of title in
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which it stated that it had deposited the title deeds with intent to create a lien/equitable
mortgage/charge upon all property compromised therein.
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The respondent company agreed to execute a legal mortgage. The appellant bank applied for a

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declaration that it was entitled to be considered as a legal mortgagee. The respondent company
unsuccessfully argued that the primary remedy of an equitable mortgage was foreclosure under the
order of the court and that the appellant should in the first instance have applied for an order for the
execution by the respondent of the legal mortgage. Uganda then did not have statutory provisions as to
remedies and it was presumed that the English equitable doctrines applied.

In Kenya the Equitable Mortgages Act Cap 291 permits the creation of equitable mortgages
by the deposit of title deeds with intent to create a security thereon.
The Act was enacted in view of the difficulty the owners of land had under GLA and LTA
;attempt to create equitable mortgages by deposit of titles was restricted in view of the
provisions in the two Acts requiring registration the precise value of the security was not
clear.
Section 2 of the Equitable Mortgages Act states that such deposit has the same effect on
immovable property sought to be mortgaged or charged as an equitable mortgage by
deposit of title deeds in England.
Section 101 (2) of the GLA provides that a memorandum of such equitable mortgage has to
be registered.
See also Samuel kenneth Ondendaal & the official receiver vs. Richard Gray (1960)EA 263

Samuel Kenneth Ondendaal & the Official Receiver vs. Richard Gray (1960)EA 263

The Court of Appeal considered the case of Barclays Bank DCO vs. Gulu Millers (1959)EA 540 with
approval and went on to hold that in Kenya the effect of Section 2 of the Equitable Mortgages Act was
to equate a mortgage by deposit of titles in Kenya to an equitable mortgage in England.

An equitable mortgagee in England had the remedies of foreclosure, sale and appointment of receiver
through Court provided there was a mortgage by an agreement to create legal mortgage or a deposit of
documents of title or a mortgage of equitable interest.

Section 66 of RTA also allows a charge by deposit of documents of title and stipulates for
registration of the memorandum. According to RTA this security is equivalent to equitable
mortgages.

LEGAL VS EQUITABLE MORTGAGE

a) Legal Mortgage

Legal- transfers legal interest in land whether leasehold or freehold from mortgagor to
mortgagee. It must be created by deed or statutory form
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Importance
i. It is easier to enforce
ii. Priority-a legal mortgage without prior notice of an equitable mortgage takes
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iii. Less prone to fraud than equitable mortgage where a borrower can obtain a
provisional title and deal with the property.

Based on pre 1926 English Mortgage. S 58(c) ITPA the mortgagor bound himself to repay the
mortgage money on a certain date and transfers the mortgage property absolutely subject
to the proviso that the mortgagee will retransfer it back to him on the repayment of the
mortgage money.
Form of security under GLA and LTA whose substantive law was ITPA

b) Equitable Mortgage

Equitable- transfers an equitable interest in land or other properties. It is an agreement to

enter into a mortgage agreement, created on the rules of equity. A mere deposit of a title
deed in exchange for a loan without a written agreement is an equitable mortgage;

Advantages-

i. Small amounts
ii. Short repayment periods
iii. Urgency

S 2 of Equitable Mortgages Act (cap 291) nothing shall invalidate charges made by delivery of
title to person with intention to create a mortgage
Proof of intention- signing a memorandum
This kind of mortgage emanates from the doctrine, equity considers done that which ought
to be done
Reflection? How does this doctrine sit with S (3) of the Law of Contract Act?
What about the requirement of registration of dispositions in land?

Legal and Equitable Mortgages were found under the LTA and GLA.
Legal and Equitable Charges were found under the RTA.
Legal Charges were found under the RLA only. There were no equitable charges under the RLA.

Reason: Under the RLA, the Land Certificate or Title Deed for absolute proprietorship and the Certificate
of Lease for a leasehold interest were only prima facie evidence of title. The conclusiveness of title was
the Register. RLA documents of title were not proof of the indefeasible interest of the registered
proprietor, unlike the Certificate of Title or the Grant under the RTA. As such, the RLA document of title
could not be deposited with a lender to create an equitable charge.

Further, the issuance of a title document under the RLA was not automatic. The proprietor was required
to apply for it to the Registrar and pay the requisite fee. In addition, the proprietor was required to pay
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for every subsequent entry in the Register.

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CLASSIFICATION UNDER THE NEW LAND REGIME

Under the Land Act 2012 we have

1) Formal Charges
See Section 79 (5) LA, prescribed instrument in prescribed register.
Also known as a legal charge
A formal Charge as found under the Land Act and previously under both the RLA &
RTA as well as under the ITPA (S.100) does not effect any transfer of interest in the
property but the land is basically designated as security for the debt.
There is no demise or sub demise. [Reflection: Which provisions of the statute
previously provided for this and which section of the current statutes provides
likewise now].
Legal Charges can be clearly distinguished from legal mortgages.
i. The distinction is that whereas a charge only gives right to payment of a
particular fund or property without transferring that fund or property a
mortgage is in essence a transfer of an interest in specific immovable
property.
ii. Practically thus a mortgage is a jus in rem and will be good against any
subsequent transferees. In the case of a mortgage a mortgagee acquires
interest in the property whilst in the case of a charge a charge acquires
interest over the property.
iii. In case of mortgagee one says take my land until I pay you the money you
gave me but in the case of a charge he says give me money and if I don’t pay
take my land.
2) Informal Charges
See Section 79 (6) LA
Also known as an equitable charge
Written or witnessed undertaking from chargor accepted by chargee with intention
to charge
Deposit of certificate of title or lease document or any evidence of ownership or any
undertaking observed by custom
Banks occasionally lend minus any legal deeds being perfected and registered.
A simple informal memo accompanied with a deposit of the original titles will suffice
to create an equitable charge otherwise known under the statute (the Land Act) as
an Informal Charge.
The basis of an equitable charge is the contract by the proprietor to transfer a
proprietary interest by way of security to the lender.
The court in such an instance can compel creation of a legal charge so long as the
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contract meets the requisite contractual requirements.

Case law reveals that an equitable charge will be created in other various ways
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A defective legal charge or mortgage will create an equitable mortgage or charge. A

formal agreement to create a legal mortgage or charge will also create an equitable
charge.
A floating charge (an all asset Debenture) too can create an equitable charge as will
a written authority to the lender to sell a property and retain the proceeds or even a
written undertaking to hold documents to the order of the lender.
Under the GLA /LTA /RTA such equitable charges were created by registering a
formal memorandum of deposit of title as provided for under the Equitable
Mortgages Act (Cap 291) of the Laws of Kenya. The intent to create a legal mortgage
or security must be there.
Section 79(6) of the Land Act, 2012 provides for equitable Charges.
The only advantage that Equitable Charges have is that they are informally created
without the rigors and formalities of conveyancing.
However the informality leads to various disadvantages.
i. They are not easy to realize as securities as one must go to court and get the
remedy there from.
ii. Equitable charges are also always so uncertain as to terms and
iii. Finally they are very inferior as the doctrine of priority may lead to their
being watered down when a third party registers an interest.
[ Reflection: read the case of Santley vs. Wilde 1899 2Ch 474 ]

79. Informal charges.

1. An owner of private land or a lessee, by an instrument in the prescribed form, may charge the
interest in the land or a part thereof for any purpose including but not limited to securing the
payment of an existing or a future or a contingent debt or other money or money's worth or the
fulfillment of a condition.
2. The power conferred by subsection (1) shall include the power to create second and subsequent
charges.
3. A charge of a matrimonial home, shall be valid only if any document or form used in applying for
such a charge, or used to grant the charge, is executed by the chargor and any spouse of the
chargor living in that matrimonial home, or there is evidence from the document that it has
been assented to by all such persons.
4. The power conferred by this section shall be exercisable subject to—
(a) any prohibition or limitation imposed by this Act or any written law; and
(b) any restriction contained in an instrument creating or affecting the interest in land that
is to be the subject of a charge.
5. A formal charge shall take effect only when it is registered in a prescribed register and a
chargee shall not be entitled to exercise any of the remedies under that charge unless it is so
registered.
6. An informal charge may be created where –
(a) a chargee accepts a written and witnessed undertaking from a chargor, the clear
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intention of which is to charge the chargor’s land or interest in land, with the repayment
of money or money’s worth, obtained from the chargee;
(b) the chargor deposits any of the following-
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i. a certificate of title to the land;

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ii. a document of lease of land;

iii. any other document which it is agreed evidences ownership of land or a right to
interest in land.
7. A chargee holding an informal charge may only take possession of or sells the land which is the
subject of an informal charge, on obtaining an order of the court to that effect.
8. An arrangement contemplated in subsection (6)(a) may be referred to as an "informal charge"
and a deposit of documents contemplated in subsection (6) (b) shall be known and referred to
as a "lien by deposit of documents."
9. A chargee shall not possess or sell land whose title documents have been deposited with the
chargor under an informal charge without an order of the Court.

S26 LRA certificate of title is conclusive evidence of proprietorship (this was the
position with RTA)

3) Further Charge
See Section 57 of the LRA
Basically this is an additional facility by the same lender to the same borrower on
the security of the same property
Borrower and lender always the same.
4) Second Charge
A separate charge over the same property to a different lender.
There is a new party in the form of a second lender or financial institution advancing
additional finances. The second financial institution requires the consent of the first
lender.
Note: Second mortgages and further mortgages have been questioned because the
mortgage transfers the interest in the first place and nothing is left save for
reversionary interest.
S 2 LA defines a charge to include a sub-charge -A chargee may charge the rights it
has under the charge therefore create a charge out of a charge in order to raise
money as an alternative to assigning the debt. The sub-chargee has the double
security of the original chargor and the original chargee.
The Second charge has several disadvantages
i. A second chargee does not hold title documents.
ii. Power of disposing property is exercised to his exclusion. The first charge
can sell the property.
iii. The first chargee ranks first in property over the second.
iv. In order to remedy this settle for a lender’s agreement between the 1st and
2nd chargee to take care of issues as to how to dispose of the sale proceeds.
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5) Third Party Charges

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MORTGAGE INSTITUTIONS

Central Bank?- licences banks and acts as a banker of the banks. Regulation is under the
Central Bank Act (Cap 491)

Banks, financial institutions and mortgage institutions

National Housing Corporation e.g. the tenant purchase scheme.

Employees housing scheme

BASIC REQUIREMENT OF A CHARGE

S 46 RTA forms J(1) and J(2)

i. There must be a chargor

ii. Name and description of lender

iii. Description of property

iv. Amount advanced

v. Acknowledgement of receipt of loan

vi. Covenant to repay principal & interest

vii. Special conditions (if any)

viii. A charging clause

S 80(3) LA every charge instrument to contain:-

ix. The terms and conditions of sale

x. An explanation of the consequences of default

xi. The reliefs that the chargee is entitled to including the right of sale.
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SECURITIZATION AND COMPLETION OF MORTGAGES AND CHARGES

STEP 1: DUE DELIGENCE

The process starts by an application of the borrower to the bank.

This is done through a standard form.
This is done through due diligence process which may or may not involves you as a lawyer.
The bank conducts a credit assessment of the borrower.
In the standard form application the borrower authorizes this assessment and the bank
really investigates as they go to the lawyer and the police station.
Another due diligence is the valuation of the property especially if it is a mortgage. There is
an offer letter. After this you as a lawyer become involved in drafting the security document.

STEP 2: PARTICULARS AND DOCUMENTS

For security of the document you require:

1. Details of the parties, proper names and address, it may look simple but you will realize that
this is very critical especially when sending the statutory notice then your client will be the
loser.
i. Full name of the Lender and his advocates if available e.g. Bank, Branch etc
ii. Full name of the borrower and his advocates if available
iii. Full name and details of the guarantors

2. The loan amount, the amount that is to be secured from the document. This amount could
potentially be different. This has cause problems because you may be lent 200 million and
the property is valued at 20 million and you pay 30 million. There must be a continuing
security clause as it will cover the balance. If it has such a clause then the property continues
to be a security and cannot be redeemed.
3. Amount secured by the charge (if it is different from the loan amount)
4. Repayment period
5. Proper interest rate or whether or not interest is payable. This may not be very critical but
when taking of remedies it becomes important
6. Repayment mode of the principal and interest- i.e. amount of installment and whether
payable monthly, quarterly etc.
7. Particulars to be charged or mortgaged. Preferably get the tile and get the correct tiles. So
that you aren’t using a defective document.
8. The nature of the security to be created. Get proper instructions from your client as to what
is being created. Is it collateral or supplementary to the main security which is the
debenture, is it a legal charge?

STEP 3: DUTIES OF LENDER’S ADVOCATE

1. Advice the bank on the appropriate security legal (formal) vs. equitable (informal) charge.
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2. Do proper investigation of title e.g. do search (both official and historical) in all relevant
registries.
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3. Obtain title documents.

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4. Deduce title docs & send requisitions, if necessary

5. Advice the lender to do a physical inspection of the property and value the property
6. Confirm capacity of the borrower-This is the capacity of the party creating the mortgage or
charge if the party is a minor advises the parties as appropriate. If the party is a trustee
advise the client as appropriate. The trustee’s are limited as they may create charges but
they can’t create mortgages, if it is a company, look at the memorandum and articles. Under
the insurance act, the insurance cannot create mortgage or charges on the life fund. If the
party doesn’t have capacity it can be created as null and void. For companies if there is no
authority to borrower there will be a problem.(Company- confirm if memorandum and
articles allow for borrowing and charging If Trustees-confirm if trust deed allows for
borrowing and charging)
7. Draft the charge and send it to the Lender for approval if necessary (In most cases it is a take
it or leave it basis but there can be genuine mistakes which can be rectified) Note: The
Borrower has a right to seek independent legal advice from his own Advocate.
8. After effecting amendments, if any, on return after confirmation,
9. Ensure that the parties have obtained the relevant consents, where applicable
10. Obtain funds for stamping and registration
11. Engross the charge and send it for execution and attestation
12. Ensure execution and attestation is done in accordance with the law ( e.g Confirm execution
is the Advocate qualified (Ndolo Aya Case);forward the document to the Borrower or his
Advocate for execution by the Borrower – See S.56(1) of the Land Registration Act on
execution of a Charge as read together with Sections 44 and 45 of the same Act on
execution attestation and verification. )
13. Dispatch document to the lender for execution and attestation (Execution is done by both
parties At the execution phase Barclays Bank v. Obrien- Advise the client on the effect of the
document. Attest to the document personally as an advocate)
14. Pay stamp duty (obtain from the borrower)
15. Lodge for registration at lands registry and companies registry (if it is a company within 42 of
registration of charge S 96, 97, 99 of Companies Act, void against liquidator), Cooperative
Societies- See Cooperative Societies Act
16. Forward the perfected documents to your client with a report on the title confirming the
registration
17. Obtain loan proceeds from chargee for onward transmission to the chargor or his advocate
18. Complete accounting and obtain Advocate’s fees or Follow up on fee payment.
19. Dispose of any documents in the Advocate’s possession as directed by the Lender

STEP 4: DUTIES OF BORROWER ADVOCATE

1. Discuss offer letter with borrower and advise on effect of security

2. Obtain all requisite consents, clearances from seller (usually upon a professional undertaking
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for payment upon registration)

3. Obtain original title from seller (usually upon a professional undertaking for payment upon
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4. Obtain a professional undertaking from the lender’s advocates that they will not use the title
document for any other purpose than for the transaction. The title documents should enable
the Lender’s Advocate to investigate title and draft the Charge (only)
5. Explain the contents of the charge to your client and its effect
6. Approve the charge
7. Obtain sufficient funds from the Borrower for stamping and registering the document
8. The Advocate may be called upon to approve a Further Charge
9. Once the charge debt is repaid, the Advocate prepares the Discharge of Charge
10. He forwards the Discharge to the Lender’s Advocate for approval
11. Once approved, he engrosses the document and sends it back to the Lender’s
12. Advocate for execution by the Lender
13. He takes the document for stamping and registration
14. He obtains his legal fees and disposes of the documents as required
15. Ultimately prepare the discharge or re-conveyance.

Further Charge
The Advocate for the Lender may also be called upon by the Lender to draft a Further
Charge where the Lender lends additional funds to the same Borrower.
The procedure for drafting the Further Charge is the same as that for a Charge.
Although the Advocate need not investigate the title again since the property will already
have been charged to the Lender who will be holding the title documents, it is advisable and
prudent to investigate title afresh.

Discharge of Charge
Upon full repayment of the charge debt by the Borrower, a Discharge of Charge will be
prepared. This is usually done by the Borrower’s Advocate.
The Lender’s Advocate will therefore have the duty of approving the draft on behalf of the
Lender.
He will also ensure that the Discharge is executed by the Lender.
The fee for approving the Discharge is paid by the Borrower.

Advocate acting for both Borrower and Lender and Borrower is Buying
Where the Advocate is acting for both the Borrower and Lender and the Borrower is using
the loan facility to purchase the property to be charged from a third party, the process
involves additional responsibilities.
As soon as the Advocate receives formal instructions to draft the Charge from the Lender, he
will request the Lender to confirm that upon successful registration of the Charge, the
Lender will release the loan proceeds to the Advocate for onward transmission to the
Vendor’s Advocate.
Note: Payment to the Vendor’s Advocate should be conditional upon registration of the
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Charge in favour of the Lender.

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Conflicts of interests
Ethical and professional responsibility issues may arise. Remember the general principle that
unless you cannot avoid it, you should refrain from acting for both parties

King Woolen Mills Ltd & Anor vs. M/S Kaplan & Stratton [1993] LLR 2170 (CAK), (C.A
55/93)

Uhuru Highway Development Ltd & others vs Central Bank of Kenya Ltd & others (2),
[2002] 2 EA 654.

In Mortgage Express Limited V Bowerman & Partners (1996) 2 ALL ER 836, It was held that
when you act for both borrower and lender, the highest duty is to the lender

Where 3rd parties are involved eg Spouse ensure that they have obtained independent legal
advise. BBK PLC V O’brien (1994)1 AC 180- the transaction can be challenged on this ground.

IMPORTANT COVENANTS IN A CHARGE AND IMPORT THEREOF

See Section 88 of the Land Act

1. to pay principle money on day appointed in charge and interest at rates agreed upon

2. Pay all rates, charges, rent, taxes and other outgoings

3. Repair and keep in repair all buildings and other improvements

4. Insure

5. Use land in a sustainable manner

6. Not to lease or sublease for more than a year without consent of chargee

7. Not to transfer, assign or lease without written consent of chargee

8. If a lease; to pay rent perform and observe covenants in the lease

9. If a second or subsequent charge, to pay interest on each prior charge when they fall due

10. In 2, 3, 4, 5 and 8 chargee may pay on behalf of chargor and include the amount so paid in
principal amount

Covenants, Conditions and Powers Implied in Charges

88. Implied covenant by the chargor.
1. There shall be implied in every charge covenants by the chargor with the chargee binding
the chargor—
(a) to pay the principal money on the day appointed in the charge agreement, and, so
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long as any of the principal money or any part thereof remains unpaid, to pay
interest on the money thereon or on so much of the money that for the time being
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agreement;
(b) to pay all rates, charges, rent, taxes and other outgoings that are at all times payable
in respect of the charged land;
(c) to repair and keep in repair all buildings and other improvements upon the charged
land or to permit the chargee or chargee’s agent to enter the land and examine the
state and condition of such buildings and improvements at after a seven days notice
to the chargor until the charge is discharged;
(d) to ensure by insurance or any other means that may be prescribed or which are
appropriate, that resources will be available to make good any loss or damage
caused by fire to any building on the land, and where insurance is taken out, it is
done so in the joint names of the chargor and chargee with insurers approved by the
chargee and to the full value of all the buildings;
(e) in the case of a charge of land used for agricultural purposes, to use the land in a
sustainable manner in accordance with the principles and any conditions subject to
which the land or lease under which the land is held, and in compliance with all
written laws and lawful orders applicable to that use of the land;
(f) not to lease or sublease the charged land or any part of it for any period longer than
a year without the previous consent in writing of the chargee, which consent shall
not be unreasonably withheld;
(g) not to transfer or assign the land or lease or part of it without the previous consent
in writing of the chargee which consent shall not be unreasonably withheld;
(h) in the case of a charge of a lease, during the continuance of the charge, to pay,
perform and observe the rent, covenants and conditions contained in or implied by
and in the lease contained and implied and on the part of the lessee to be paid,
performed and observed and to keep the chargee indemnified against all
proceedings, expenses and claims on account of non-payment any part of the rent
or part of it or the breach or non-observance of any covenants and conditions
referred to above, and, if the lessee has an enforceable right to renew the lease, to
renew it;
(i) if the charge is a second or subsequent charge, that he chargor will pay the interest
from time to time accruing on each prior charge when it becomes due and will at the
proper time repay the principal money or part of it due on each prior charge at the
proper time;
(j) if the chargor fails to comply with any of the covenants implied by paragraphs (b),
(c), (d), (e) and (h) of this subsection, that the chargee may spend any money which
is reasonably necessary to remedy the breach and may add the amount so spent to
the principal money and that amount shall be deemed for all purposes to be a part
of the principal money secured by the charge.
2. Reference to the obligation of the chargor in subsection (1) (b) to keep all buildings upon the
charged land in repair shall be taken to be an obligation to keep such buildings in a
reasonable state of repair as set out in section 65.
3. The provisions of section 66 shall apply to an application by a chargor to a chargee for
consent under paragraphs (f) and (g) of subsection (1).
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BORROWER’S RIGHT
The Borrower has a right to redeem his property. This is referred to as the equity of
redemption. This right must not be fettered:
Section 89(1) of the Land Act No.6 0f 2012 provides that any law entitling a charge to
foreclose the equity of redemption is prohibited. Further, such right exists until the time the
charged land is sold. In a sale by public auction the land is deemed to be sold when a bid is
accepted. The acceptance of the bid at the auction also signifies that a binding contract has
been entered into. (Law of Contract: offer and acceptance = binding contract)
Compare: Under the ITPA, the equity of redemption was extinguished when the mortgagee
had, either by public auction or private contract, entered into a binding contract for the sale
of the mortgaged property: See S.60 ITPA as amended by Statute Law (Miscellaneous)
(Amendment) Act 1985 No. 19 0f 1985.

89. Equity redemption.

1. Any rule of law, written or unwritten, entitling a chargee (chargee) to foreclose the equity of
redemption in charged land is prohibited.
2. Upon commencement of this Act, a chargee shall not be entitled to enter into possession of the
charged land or a charged lease or to receive the rents and profits of that land or lease by
reason only that default has been made in the payment of the principal sum or of any interest
or other periodic payment or of any part thereof or in the performance or observance of any
agreement expressed or implied in the charge, other than in accordance with the provisions of
this Act.

LENDER’S OBLIGATION
Section 102(2) (a) and (b) of the Land Act No.6 of 2012
The Lender/Chargee has the obligation to discharge the charged property by delivering to
the Chargor a Discharge of Charge together with all documents of title held by the Chargee
in connection with the charged land.

102. Right of chargor to discharge charge on payment of any sum due any time before sale.
1. At any time before the charged land is sold, or withdrawn from sale, the chargor or any other
person entitled to discharge the charge may discharge the charge in whole or in part by paying
to the chargee all money secured by the charge at the time of payment.
2. If payment is made under subsection (1), the chargee shall deliver to the chargor—
(a) a discharge of the charge in the prescribed form over the whole or that part of the
charged land to which the payment relates; and
(b) all instruments and documents of title held by the chargee in connection with the
charged land.
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PRIORITY OF CHARGES AND SUB-SEQUENT CHARGES

The process is the same with subsequent charges.

The rules on priorities organize interests in ranking, so that each party can ascertain which
interests are prior and which are subordinated to his or hers.
The general rule is that the charge which is first made is first paid or discharged. Priority is
conferred by registration. The first registered charge has priority over all the others.
See Section 81 LA

81. Order of priority of charges.

1. Charges shall rank according to the order in which they are registered.
2. Informal charges shall rank according to the order in which they are made provided that a
registered informal charge shall take priority over any unregistered informal charge.
3. If two informal charges are made on the same day or are registered on the same day, the charge
which was first in time to be made or registered shall have priority.
4. If a chargor, subsequent in time to a prior chargor under a charge, lends money or money's
worth on the security of a charge to a chargor as a consequence of or through the fraud,
dishonesty or misrepresentation of the prior chargee, either in conjunction with or separately
from the fraud, dishonesty or misrepresentation of the chargor, that prior chargee's right to
repayment under the charge shall be postponed to the rights of the subsequent chargor.
5. The rules of priority for informal charges shall apply as far as the circumstances shall permit
liens by deposit of documents.

CHARGEE’S RIGHT TO TACK

Section 82 of the Land Act No. 6 of 2012 - This must be provided for expressly in the charge
instrument and must also be recorded in the Register.
The right of a secured lender to add further monies to the security so that further monies
are also secured.
The further advances are also tacked into the original charge and have the same priority
over subsequent lenders only with their consent see S 82 LA

82. Tacking.
1. Subject to the provisions of this Act, a chargor may make provision in the charge instrument to
give further advances or credit to the chargor on a current or continuing account.
2. A further advance referred to in subsection (1) shall not rank in priority to any subsequent
charge unless—
(a) the provision for further advances is noted in the register in which the charge is
registered; or
(b) the subsequent chargor has consented in writing to the priority of the further advance.
3. Except as provided for in this section there is no right to tack.
4. Where a charge provides for the payment for a principal sum by way of installments, the
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payment of those installments shall not be taken to be a further advance.

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CHARGEE’S RIGHT OF CONSOLIDATION

Section 83 of the Land Act No. 6 of 2012 - This must be provided for expressly in the charge
instrument and must also be recorded in the Register.

83. Consolidation.
1. Unless there is an express provision to the contrary clearly set out in the charge instrument, a
chargor who has more than one charge with a single chargee on several securities may
discharge any of the charges without having to redeem all charges.
2. A chargee who has made provision in accordance with subsection (1) for the consolidation of
charges shall record that right in the register or registers against all the charges so consolidated
that are registered.
3. Upon commencement of this Act, the rules of equity applicable to consolidation shall not apply
to charges.

SOME CASE LAWS

Angwenyi & Another vs. NIC Bank Ltd(2004) e KLR

Charge created but loan was not disbursed, bank sought to sell the property in satisfaction of a hire
purchase facility which was secured by vehicles that were purchased. It was held that since loan was not
disbursed there was no consideration that would entitle the bank to sell the property

Labelle International Ltd & Another. Vs. Fidelity Commercial Bank & Another. (2003) 2 EA 541
A wife and husband guaranteed their company loan advances made by the respondent bank. The
borrower defaulted. The bank issued a statutory notice and upon its expiry the bank moved to sell the
property charged to it by way of public auction. The borrower and the chargors moved to court and
contended that the charge gave no statutory power of sale to the bank because the execution of the
charge had been witnessed by an advocate but the certificate under s.69 had been signed by another
advocate altogether.

Nyamu J held that lack of the certificate or even improper execution of the charge document does not
take away the statutory power of sale granted by both the charge document and the statute to the
bank. This upheld the provisions of s.3(3) of the Law of Contract Act.

The Advocate who signed the attestation certificate is not the one who witnessed the chargors’
signatures. This was an RTA charge which did not need to be attested. Application for injunction was
dismissed

Anthony Anthanus Ngotho t/a Ngotho Architects Vs NIC Bank Ltd HCCC No, 319 0f 2003
Mortgage prepared by mortgagee’s advocates exclusively, mortgagor had no counsel representation.
The Letter of offer was dated several months later than mortgage.
It was held that the mortgage was validly executed. The apparent defect on the mortgage (ie it was
created before the offer was accepted) is evidence of a prima facie case.
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FORM AND CONTENT OF A FORMAL CHARGE

No. FORM CONTENT

1. COMMENCEMENT DATE This is the date of issue don’t date until it has been signed by all parties and the monies disbursed

2 THE PARTIES Proper description of the parties (Chargor and the Bank ), their addresses and the properties to be charged/ mortgaged.
This is crucial especially when a need to exercise statutory remedies arises i.e. one need to serve a statutory notice to the
borrower.

See :Simiyu v Housing Finance Co. Ltd [2001] 2 EA 540

Ringera J held that where the plaintiff has shown a correct address and has alleged that she was not served with the
statutory notice, she was entitled as a matter of course to an injunction restraining the bank from selling the property for
lack of a proper statutory notice.

NOTE: Where the lender is in possession of several addresses, the best approach is to send the statutory notice to the
last known address.
3. PRINCIPAL AMOUNT This is the amount borrowed by the Chargor. The denomination and amount in both words and figures

4. RECITALS WHEREAS
(a) The borrower’s title-“The Chargor is the registered proprietor as a leasee of ALL THAT ...erected on the Property
Land Reference xxx (Original Title No) more particularly.....

(b) Agreement to lend/borrow-“ The Bank has agreed at the request of the Chargor to make to continue from time
to time to make loans or advances.........

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(c) Agreement to create a legal charge-“The Chargor in consideration of the matters referred in Recital B above has
agreed to create a legal charge (Being this charge) over the Premises to secure the Principal amount on the terms

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5. TESTATUM NOW THIS CHARGE WITNESESS

(1) Covenant to pay
(2) Interest
(3) Secured obligations- aggregate principal amount, all interest from time due, all costs, taxes, liabilities, charges
and expenses incurred by the bank from time to time in relation to the charge
(4) Charging clause.... Charge the premises as continuing security for the payment and discharge in full of the
secured obligations. See Equip Agencies v. Credit Bank Ltd [2004] 2 EA 61

Equip Agencies v. Credit Bank Ltd [2004] 2 EA 61

The charging clause didn‟t include chattels fixtures and fittings. It was held that in the absence of a chattels,
mortgage or a debenture, the bank could not sell the chattels, fixtures and fittings but could only sell the land.

(5) Chargor’s covenants

(6) Events of default
(7) Bank’s remedies
i. Serve notice as per Section 90 LA and if the Chargor does not comply(S90 (3)LA:
ii. Sue the chargor for any money due under the charge;
iii. Appoint a receiver of income of the premises;
iv. Lease or sublease the premises;
v. Enter into possession of the premises;
vi. Sell the premises
(8) Statutory power of sale
Before sale
i. serve 40 day notice;
ii. Value the premises;
iii. Prioritization of application of proceeds from sale i.e. rates, rent, taxes, discharge of prior charge, all

343
costs and reasonable expenses, discharge of principal amount, payment of subsequent charges
(9) Further advances (S 82 LA)
To rank in priority to any subsequent charge

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(10) Right of consolidation- (S 83 LA)

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Chargee may consolidate

(11) Application of monies
to satisfy the debt
(12) Indemnity-
chargor to indemnify chargee/receiver
(13) Power of attorney-
chargor appoints the chargee to be attorney of chargor
(14) Discharge- upon payment of final balance
(15) Matters to be noted in the register-
the banks rights of tacking and consolidation
(16) Governing law

NB:The list above is not exhaustive

6. Execution and Attestation S 38 LA
Contract for the disposition of an interest in land must be:
i. In writing
ii. Signed by all parties thereto
iii. Attested by a witness who was present when it was signed
Read Section 44 LRA generally
This section should be read together with S 44(1) LRA which provides that every instrument affecting the
disposition of land must be executed by each of the parties consenting to it.
Section 44(2) LRA- execution should consist of the person executing the instrument appending his or her
signature or affixing his or her thumbprint or other mark as evidence of personal acceptance
Section 44(3) LRA-Execution of the instrument by a Corporate body, association, cooperative society or any
other organization should be effected in the presence of an advocate, a magistrate, judge or a notary public
Section 45(1)LRA -a person executing the instrument is required to appear before the registrar, public officer or

344
any other person prescribed and be accompanied by a credible witness for purposes of establishing identity
unless his identity is known to the Registrar or prescribed officer. The Registrar or public officer must identify the
person executing the instrument and ascertain whether the person freely and voluntarily executed the

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This execution process must be followed whenever executing all instruments under the meaning of disposition b(
which includes an agreement to undertake these dispositions). Does this then mean facility letters for credit
facilities, letters of offer?
Section 56(1)LRA- requires that for charges the chargor must acknowledge that he understands the effect of
Section 90 of the LA which among other things provides for the remedies of the chargee.
Signed by the Chargor ID No:................................

xxxxxxxxxxxxxxxxxx PIN No...............................

In the presence of .................................................

................................................ Chargor’s Signature

Advocate’s signature

I, yyyyyyyyyyyyyyyyyyyyy, an advocate of the High Court of Kenya who witnessed I, the above named chargor acknowledge that i understand the
the execution of this Charge, CERTIFY that the above named chargor appeared effect of Section 90 of the Land Act (the Act) and the Chargee’s
before me on the ....day of ....2012 and(being known to me/being identified to me remedies under this charge and I hereby agree that the Chargee’s
by sssssssssss acknowledge the above signature or mark to be his/hers and that rights under Sections 82 and 83 of the Act and restrictions under
he/she had freely and voluntarily executed this instrument and understood its Section 87 of the Act and Section 59 of the Land Registration Act be
contents noted against the above title.

Signed by ppppppppppp .................................

The duly constituted Attorney of the chargee Chargor’s signature

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Under and by virtue of a Power of Attorney registered at the Lands Titles Registry as

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number................and at the Registry of Documents at Nairobi as Number......

In the presence of

......................

Advocate

I,CERTIFY that the above duly constituted Attorney of the Chargee, appeared before me on the ....day of ....2012 and(being known to me/being identified
to me by sssssssssss acknowledge the above signature or mark to be his/hers and that he/she had freely and voluntarily executed this instrument and
understood its contents.

..................................

Bank official’s signature

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SEE SAMPLES

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Retrospective Effect
Part VII of the LA Section 78(1)- has a retrospective effect that provides that provisions of
Part VII shall apply to all charges including any charge made before the coming to effect of
the LA

Retrospectivity of this Part may be challenged as being unconstitutional See Art. 116 (2)

78. Application of Part to charges.

1. This Part applies to all charges on land including any charge made before the coming into effect
of this Act and in effect at that time, any other charges of land which are specifically referred to
in any section in this Part.
2. References in this Part to "the charged land" shall be taken to mean and include a charged land,
a charged lease and sublease and a second or subsequent charge.

Article 116 of Constitution: Coming into force of laws.

1. A Bill passed by Parliament and assented to by the President shall be published in the Gazette as
an Act of Parliament within seven days after assent.
2. Subject to clause (3), an Act of Parliament comes into force on the fourteenth day after its
publication in the Gazette, unless the Act stipulates a different date on or time at which it will
come into force.
3. An Act of Parliament that confers a direct pecuniary interest on members of Parliament shall not
come into force until after the next general election of members of Parliament.
4. Clause (3) does not apply to an interest that members of Parliament have as members of the
public.

Variation of Interest

Section 84 LA introduces an onerous provision that where it is contractually agreed that the
rate of interest is variable, the chargee must serve a written notice to the chargor

o Giving the chargor 30 days notice of the reduction or increase in the rate of interest

o Stating clearly and in a manner likely to be understood the new rate of interest.

It’s important for banks to keep proof of such service.

Under the new interest cap regime it is important to ensure it does not surpass the statutory
required interest rates.

84. Variation of interest rate.

1. Where it was contractually agreed upon that the rate of interest is variable, the rate of interest
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payable under a charge may be reduced or increased by a written notice served on the chargor
by the chargee,—(a) giving the chargor at least thirty days notice of the reduction or increase
in the rate of interest; and (b) stating clearly and in a manner that can be readily understood,
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2. The amount secured by a charge may be reduced or increased by a memorandum which

shall—
(a) comply with subsection (5); and
(b) be signed— (i) in the case of a memorandum of reduction by the chargee; or (ii) by the
chargor; and
(c) state that the principal funds intended to be secured by the charge are reduced or
increased as the case may be, to the amount or in the manner specified in the
memorandum.
3. The term of a charge may be reduced, extended or renewed by a memorandum which—
(a) complies with subsection (5);
(b) is signed by the chargor and the chargee; and
(c) states that the term of the charge has been reduced, extended or renewed, as the
case may be, to the date or in the manner specified in the memorandum.
4. The covenants, conditions and powers expressed or implied in a charge are varied in the
manner specified in the memorandum.
5. A memorandum for the purposes of subsections (2),(3) and (4) shall—
(a) be endorsed on or annexed to the charge instrument; and
(b) upon endorsement or being annexed to the charge instrument, vary the charge in
accordance with the terms of the memorandum.

Fraud, Dishonesty and Misinterpretation of Prior Chargee

• Section 81(4) LA any misleading, false information by a prior chargor to a subsequent lender
leading to creation of a subsequent charge will result in the subsequent chargee getting
priority in the exercise of its rights over the property.

Spousal Consent

Section 79 (3) of LA provides that a charge of matrimonial home shall be valid only if any
document or form used in applying for the charge or used to grant the charge is signed by
the chargor and any spouse of the chargor living in that matrimonial home or there is
evidence that it has been assented to by all such persons.
A matrimonial home is defined under Section 2 to mean” any property that is owned or
leased by one or both spouses and occupied by the spouses as their family home”
This provision should be read together with Section 28 of LRA-overriding interests and
Section 93(3) of LRA
Section 93(3) LRA provides that where a spouse who holds land or a dwelling house in his or
her name individually wishes to give a charge over that land or dwelling house, the lender
shall be under a duty to inquire the borrower as to whether his or her spouses has9have0
consented to the charge.
Where a lender wishes to take a charge over property owned by an individual, the bank
must make inquiries regarding the marital status of the potential chargor and also if the
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property is occupied as a matrimonial home. The bank should also make inquiries through
the valuer
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If the spouse misleads a lender as to whether his or her spouse has consented to the
charge, the charge becomes voidable at the option of the spouse or spouses who have not
consented to the disposition.

93. Co-ownership and other relationships between spouses.

1. Subject to the law on matrimonial property, if a spouse obtains land for the co-ownership and
use of both spouses or, all the spouses—
(a) there shall be a presumption that the spouses shall hold the land as joint tenants
unless—
i. a provision in the certificate of ownership or the certificate of customary
ownership clearly states that one spouse is taking the land in, his or her own
name only, or that the spouses are taking the land as joint tenants; or
ii. the presumption is rebutted in the manner stated in this subsection; and
(b) the Registrar shall register the spouses as joint tenants.
2. If land is held in the name of one spouse only but the other spouse or spouses contribute by
their labour or other means to the productivity, upkeep and improvement of the land, that
spouse or those spouses shall be deemed by virtue of that labour to have acquired an interest
in that land in the nature of an ownership in common of that land with the spouse in whose
name the certificate of ownership or customary certificate of ownership has been registered
and the rights gained by contribution of the spouse or spouses shall be recognized in all cases
as if they were registered .
3. Where a spouse who holds land or a dwelling house in his or her name individually undertakes
a disposition of that land or dwelling house,—
(a) the lender shall, if that disposition is a charge, be under a duty to inquire of the
borrower on whether the spouse has or spouses have, as the case may be, have
consented to that charge; or
(b) the assignee or transferee shall, if that disposition is an assignment or a transfer of
land, be under a duty to inquire of the assignor or transferor on whether the spouse or
spouses have consented to that assignment.
4. If the spouse undertaking the disposition deliberately misleads the lender or, the assignee or
transferee by the answers to the inquiries made in accordance with subsection (3)(a) or (3)(b),
the disposition shall be void at the option of the spouse or spouses who have not consented to
the disposition

Spousal Overriding Interest over Matrimonial Property

Spousal rights over matrimonial property have now being included as an overriding interest
subsisting over registered land whether or not those interests are noted on the register. S 28
LRA

Though not defined matrimonial property encompasses more than the matrimonial home
described in S 79(3) LA defined in S2 LA
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This is the doctrine of spouse deemed ownership- Are you married? question will now
feature in land transactions S93(2)- Rights of spouse who only makes a contribution
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Though the term ‘spouse’ has not been defined, the definition can be inferred from the term
marriage S 2 LA- a civil, customary or religious marriage. What about marriage by
presumption?

REMEDIES OF THE PARTIES

(a) Chargor’s Remedies

1. Equity of Redemption
Equitable doctrine that there should be no fetter or clog on the chargor’s equity of
redemption- any provision which purports to limit, postpone or exclude the
chargor’s equity of redemption is prohibited. The right to redeem is absolute
Section 89 LA – Any law, written or unwritten that entitles the chargee to
foreclose(bar) the equity of redemption is prohibited (S72(1) RLA

89. Equity redemption.

1. Any rule of law, written or unwritten, entitling a chargee (chargee) to foreclose the equity of
redemption in charged land is prohibited.
2. Upon commencement of this Act, a chargee shall not be entitled to enter into possession of the
charged land or a charged lease or to receive the rents and profits of that land or lease by
reason only that default has been made in the payment of the principal sum or of any interest
or other periodic payment or of any part thereof or in the performance or observance of any
agreement expressed or implied in the charge, other than in accordance with the provisions of
this Act.

See Lord Parker in Krelinger V new Patagonia Meat and Cold Storage Co (1914)AC
25 at 48-

Krelinger vs. New Patagonia Meat and Cold Storage Co (1914)AC 25 at 48-
“.....the equity which arises on the failure to exercise the contractual right cannot be fettered or clogged
by any stipulation contained in the mortgage or entered into as part of the mortgage transaction” .

Mortgage was a conditional transfer with the mortgagor covenanting to pay by CDR
(contractual date of Redemption)- Redemption means the right to buy back. Even though a
charge does not involve a transfer, the chargee can exercise power of sale therefore CDR is
part of mortgage or charge.
At common law if repayment was not done by the appointed day, the conveyance became
absolute; equity found this too harsh since the lender’s right to the land was only a security
for money. Equity therefore allowed the borrower to redeem his property after the legal or
contractual date of redemption.
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On or before legal or CDR the chargor has the contractual right of redemption
If the legal or CDR date passed without payment, the mortgagor obtained an equity of
redemption.
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See In Saleh vs. Eljofry (1950)24 KLR

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Saleh vs. Eljofry (1950)24 KLR

It was held that the mortgagor’s equity of redemption was a necessary incident of every mortgage and
failure to repay on the CDR did not debar the mortgagor from his right of redemption.

Some charge instruments allow for payment by instalments after the CDR with a provision
that upon default the chargee will be entitles to exercise any of its remedies.
See Industrial and Commercial Development Corporation vs. Kariuki & Anor (1977) KLR
52.- the court stated that the right of redemption subsists until the transfer is registered.
Interfered with in two forms
i. That which make the land irredeemable
ii. Collateral provisions in the nature of a fetter of a clog
See the following cases

Nookes vs. Rice (1902) AC 24-

Mortgage had a stipulation that the mortgagor would only sell liquor provided by mortgagee. The
mortgagor sought release from this clause on repayment-the court held that this was a clog to the
equity of redemption.

Fairclough vs. Swan Bakery Co. Ltd 1(1912) AC 565-

Postpone the right to redeem for 20years it was held that this clause was invalid and the borrower had a
right to redeem at an earlier date.

Samuel vs. Jarah Timber & Wood Paving Corporation Ltd (1904)AC 323.
Mortgage conferred on mortgagee option to buy the property-This was held to be against doctrine of
equity of redemption. Clause which allowed mortgagor a limited period of redemption was void.

2. Notice
Section 90 (1) and (2) of the Land Act No.6 of 2012-If the Chargor defaults in any
obligation under the charge or fails to pay any money due under the charge, the
Chargee shall issue a statutory notice of not less than three months.
Under Section 56(2) LRA, where the date of payment of the money secured by a
charge has not been specified or has passed without demand being made, the
money becomes payable 3 months after service of a written notice of demand by
chargee to chargor

56. Form and effect of Charges.

1. A proprietor may by an instrument, in the prescribed form, charge any land or lease to secure
the payment of an existing, future or a contingent debt, other money or money’s worth, or the
fulfillment of a condition and, unless the chargee’s remedies have been by instrument, expressly
excluded, the instrument shall, contain a special acknowledgement that the chargor
understands the effect of that section, and the acknowledgement shall be signed by the chargor
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or, where the chargor is a corporation, the persons attesting the affixation of the common seal.
2. A date for the repayment of the money secured by a charge may be specified in the charge
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instrument, and if no such date is specified or repayment is not demanded by the charge on the

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date specified, the money shall be deemed to be repayable three months after the service of a
demand, a written, by the chargee.
3. The charge shall be completed by its registration as an encumbrance and the registration of the
person in whose favour it is created as its proprietor and by filing the instrument.
4. The Registrar shall not register a charge, unless a land rent clearance certificate and the consent
to charge, certifying that no rent is owing to the Commission in respect of the land, or that the
land is freehold, is produced to him or her.
5. A charge shall have effect as a security only and shall not operate as a transfer.
6. There shall be included, in an instrument of charge, securing the fulfillment of a condition or the
payment of an annuity or other periodical payment not of the nature of interest on a capital
sum, such provisions as the parties think fit for disposing, subject to application of purchase
money by the charge, of the money which may arise on the exercise by the chargee of his or her
power of sale, either by setting aside the proceeds of sale or part thereof and investing it to
make the future periodical payments, or by payment to the chargee of such proceeds or part
thereof to the extent of the estimated capital value of the chargee’s interest, or otherwise.

Notice must be issued before exercising of any remedy under LA

Notice is issued in default of any obligation including failure to make payments
where there is default for a month or more. Under Section 90(1) of LA where a
default in payment has continued for more than a month, the chargee may issue a
statutory notice. This means that under Section 90(1) LA the notice will run for 3
months .

90. Remedies of a chargee.

1. If a chargor is in default of any obligation, fails to pay interest or any other periodic payment or
any part thereof due under any charge or in the performance or observation of any covenant,
express or implied, in any charge, and continues to be default for one month, the chargee may
serve on the chargor a notice, in writing, to pay the money owing or to perform and observe the
agreement as the case may be.
2. The notice required by subsection (1) shall adequately inform the recipient of the following
matters—
(a) the nature and extent of the default by the chargor;
(b) if the default consists of the non-payment of any money due under the charge, the amount that
must be paid to rectify the default and the time, being not less than three months, by the end of
which the payment in default must have been completed
(c) if the default consists of the failure to perform or observe any covenant, express or implied, in
the charge, the thing the chargor must do or desist from doing so as to rectify the default and
the time, being not less than two months, by the end of which the default must have been
rectified;
(d) the consequence that if the default is not rectified within the time specified in the notice, the
chargee will proceed to exercise any of the remedies referred to in this section in accordance
with the procedures provided for in this sub-part; and
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(e) the right of the chargor in respect of certain remedies to apply to the court for relief against
those remedies.
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subsection (1),the chargee may—

(a) sue the chargor for any money due and owing under the charge;
(b) appoint a receiver of the income of the charged land;
(c) lease the charged land, or if the charge is of a lease, sublease the land;
(d) enter into possession of the charged land; or
(e) sell the charged land;
4. If the charge is a charge of land held for customary land, or community land shall be valid only if
the charge is done with concurrence of members of the family or community the chargee may
(a) appoint a receiver of the income of the charged land;
(b) apply to the court for an order to—
i. lease the charged land or if the charge is of a lease, sublease the land or enter into
possession of the charged land;
ii. sell the charged land to any person or group of persons referred to in the law relating to
community land.
5. The Cabinet Secretary shall, in consultation with the Commission, prescribe the form and
content of a notice to be served under this section.

Notice should require the Chargor to pay the money owing or perform and observe
the agreement as the case may be.

3. Special Acknowledgement by Chargor

Section 56(1) of the Land Registration Act No.3 of 2012
In order for the Lender/Chargee to exercise its remedies, the Chargor must have
signed the charge and his signature must have been attested and verified as
required. In addition, the charge must contain a special acknowledgement signed by
the Chargor that he understands the effect of the sections providing for the
Chargee’s remedies.

4. Damages and Injunction

These are normal contractual remedies based on common law and equity.

5. Relief
Section 103 to 106 LA chargor, spouse, guarantor, lessee, trustee in bankruptcy may
apply to court for relief against the exercise by chargee of any of these remedies
(error refers to remedies under Section 85(3) (a) and (b))
Scope of those who can sue has been widened
The Court has wide ranging powers including widening the scope of orders by the
court eg to extend time for chargor to rectify default- Section 102 LA
Court has power to reopen charges secured on a matrimonial home S105(1) and
106(2) LA
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85. Right to discharge.

1. Subject to the provisions of this section, the chargor shall, upon payment of all money secured by
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a charge and the performance of all other conditions and obligations under the charge, be

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entitled to discharge the charge at any time before the charged land has been sold by the
chargee or a receiver under the power of sale.
2. Any agreement or provision in a charge instrument that is inconsistent with subsection (1) shall
be void to the extent that it—
(a) purports to deprive the chargor of the right to discharge;
(b) seeks to fetter the exercise of this right; or
(c) stipulates for a collateral advantage that is unfair and unconscionable or inconsistent
with the right to discharge.
3. A chargee may provide, in a charge instrument, that a chargor who wishes to exercise the right to
discharge the charge at any time before the expiry of the term of the charge—
(a) shall give one month's notice of the intention to discharge; or
(b) shall pay not more than one month's interest at the rate at which interest is payable on
the principal sum secured by the charge or at any lesser rate which may be agreed, as
well as paying all other money secured by the charge.
4. A discharge of the whole or a part of a charge shall be as prescribed under this Act or any other
law.
5. For the avoidance of doubt, a discharge includes a re-conveyance and a re-assignment of charge
or any other instrument used in extinguishing of interests in land conferred by charges.

102. Right of chargor to discharge charge on payment of any sum due any time before sale.
1. At any time before the charged land is sold, or withdrawn from sale, the chargor or any other
person entitled to discharge the charge may discharge the charge in whole or in part by paying to
the chargee all money secured by the charge at the time of payment.
2. If payment is made under subsection (1), the chargee shall deliver to the chargor—
(a) A discharge of the charge in the prescribed form over the whole or that part of the charged land
to which the payment relates; and
(b) All instruments and documents of title held by the chargee in connection with the charged land.

103. Application for relief by chargor

1. An application for relief against the exercise by the chargee of any of the remedies referred to in
section 85 (3) (a) and (b) may be made by—
(a) the chargor;
(b) if two or more persons are joint chargors, by one or more of them on their own behalf;
(c) a spouse of the chargor;
(d) a lessee of the chargor; or
(e) the trustee in bankruptcy of the chargor.
2. If an application made in accordance subsection (1) (b) is not made by all the joint chargors, then,
unless the court orders otherwise, it must be served on all the joint chargors.
3. An application for relief may be made at any time after the service of a notice under section 90
(1), section 91 (2), section 94(1), section 95 (1), or during the exercise of any of the remedies
contemplated in those sections.
4. An application for relief is not to be taken as an admission by the chargor or any other person
applying for relief that—
(a) there has been a breach of a covenant of the charge by the chargor;
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(b) by reason of such a breach, the chargee has the right to exercise the remedy in respect
of which the application for relief has been made;
(c) all notices that were required to be served by the chargee were properly served; or
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reasonable or had expired, and the court may grant relief without determining all or any
of the matters described in paragraphs (a), (b),(c) or (d).

104. Power of the court in respect of remedies and reliefs.

1. In considering whether to grant relief as applied for, a court—
(a) shall, have regard to whether the remedy which the chargee proposes to exercise is
reasonably necessary to prevent any or any further reduction in the value of the charged
land or to reverse any such reduction as has already occurred if the charged land consists
of agricultural land or commercial premises, and the remedy proposed is to appoint a
receiver, or to take possession of or lease the land or a part thereof;
(b) shall, where the charged land consists of or includes, a dwelling- house, and the remedy
proposed is to appoint a receiver, or take possession or lease the dwelling house or a
part of it, have regard to the effect that the appointment of a receiver or the taking of
possession or leasing the whole or a part of the dwelling house would have on the
occupation of the dwelling house by the chargor and dependants and if the effect would
be to impose undue disturbance on those owners, whether it is satisfied that—
i. the chargee has made all reasonable efforts, including the use of other available
remedies available, to induce the chargor to comply with the obligations under
the charge; and
ii. the chargor has persistently been in default of the obligations under the charge;
and
iii. if the sale is of land held for a customary land, the chargee has had regard to the
age, means, and circumstance including the health and number of dependants of
the chargor, and in particular whether—(aa) the chargor will be rendered
landless or homeless;(bb) the chargor will have any alternative means of
providing for the chargor and dependants;
iv. it is necessary to sell the charged land in order to enable the chargee to recover
the money owing under the charge;
v. in all the circumstances, it is reasonable to approve, or as the case may be, to
make the order to sell the charged land.
2. A court may refuse to authorise an order or may grant any relief against the operation of a
remedy that the circumstances of the case require and without limiting the generality of those
powers, may—
(a) cancel, vary, suspend or postpone the order for any period which the court thinks
reasonable;
(b) extend the period of time for compliance by the chargor with a notice served under
section 90;
(c) substitute a different remedy or the one applied for or proposed by the chargee or a
different time for taking or desisting form taking any action specified by the lessor in a
notice served under section 90;
(d) authorize or approve the remedy applied for or proposed by the chargee,
notwithstanding that some procedural errors took place during the making of any notices
served in connection with that remedy if the court is satisfied that—
i. the chargor or other person applying for relief was made fully aware of the
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action required to be taken under or in connection with the remedy; and

ii. no injustice will be done by authorizing or approving the remedy, and may
authorize or approve that remedy on any conditions as to expenses, damages,
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compensation or any other relevant matter as the court thinks fit.

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3. If under the terms of a charge, the chargor is entitled or is to be permitted to pay the principal
sum secured by the charge by installments or otherwise to defer payment of it in whole or in part
but provision is also made in the charge instrument or any collateral agreement for earlier
payment of the whole sum in the event of any default by the chargor or of a demand by the
chargee or otherwise, then for purposes of this section the court may treat as due under the
charge in respect of the principal sum secured and of interest on it only the amounts that the
chargor would have expected to be required to pay if there had been no such provision for
earlier payment.
4. A court must refuse to authorise or approve a remedy if it appears to the court that—
(a) the default in issue has been remedied;
(b) the threat to the security has been removed;
(c) the chargor has taken the steps that the chargor was required to take by the notice
served under section 90; and
(d) the chargee has taken or attempted to take some action against the chargor in
contravention of section 90 (4).

6. Re-opening of Charge
Under Section 105(1) LA Court has power to reopen charges secured on a
matrimonial home in the interest of doing justice between the parties
Section 106 LA Charges can be reopened in 3 instances, on an application by:
i. Chargor or chargee to enforce a charge or commence an action under
Section 90
ii. Chargor for relief against exercise of any remedy by chargee
iii. Registrar where there is evidence of unfair dealing by chargee, or chargee is
a corporate body that discriminates against certain classes of chargors e.g
on basis of gender
The court may:
i. Direct that the charge shall have effect subject to certain modifications
ii. Require the chargee to repay the whole or part of the sum paid by the
chargor
iii. Require the chargee to compensate the chargor
iv. Direct the chargee which is a corporate body to stop acting in a
discriminatory manner.

105.Power of the court to re-open certain charges and revise terms

The Court may reopen a charge of whatever amount secured on a matrimonial home, in the interests of
doing justice between the parties.

106. Exercise of powers to re-open certain charges.

1. The court may exercise the powers conferred on it by this Act either—
a) on an application made to it for that purpose by either the chargor or the chargee—
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i. to enforce the charge; or

ii. to commence an action under section 90; or
b) on an application by the chargor for relief against the exercise by the chargee of any
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c) on an application by the Registrar in respect of—

i. charges provided by one or more specific chargees where there is prima facie
evidence of a pattern of unfair dealing and practices by that chargee or those
chargees; or
ii. a chargee, being a corporate body, that appears to exercise discrimination
against chargors on account of their gender, or by refusing to grant charges to
persons on account of their gender except that a chargee, being a corporate
body that is implementing any programme, approved or assisted by the national
or county governments, designed to assist women to improve their economic
and social position by providing them with advances secured by a charge of land
shall not be taken to be acting in discriminatory manner if the advances under
that programme are made only to women.
2. In reopening the charge, the court may—
a) direct that the charge shall have effect subject to modifications that the court shall
order;
b) require the chargee to repay the whole or part of any sum paid under the charge or any
related or collateral agreement by the chargor or any guarantor or other person who
assumed an obligation under the charge whether it was paid to the chargee or any other
person;
c) require the chargee to pay any compensation to the chargor which the court shall think
fit; or
d) direct the chargee, being a corporate body to cease acting in a discriminatory manner
with respect to the granting of charges.
3. In considering whether to exercise the powers conferred on it by this section, the court shall
have regard to—
a) the age, gender, experience, understanding of commercial transaction, and health of the
chargor at the time when the charge was created, if the chargor is an individual;
b) the financial standing and resources of the chargor relative to those of the chargee at the
time of the creation of the charge;
c) the degree to which, at the time of the creation of the charge, the chargor was under
financial pressure and the nature of that pressure;
d) the interest rates prevailing at the time of the creation of the charge and during the
continuation of the charge and the relationship of those interest rates to the interest
rate applying from time to time in the charge;
e) the degree of risk accepted by the chargee, having regard to the value of the charged
land and the financial standing and other resources of the chargor;
f) the importance of not undermining the confidence of reputable chargees in the market
for charges;and
g) any other factors that the court considers relevant.

(c) Chargee’s Remedies

1. Action for Money
Section 91 LA- Chargee can sue for money secured if:
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i. Chargor is personally bound to repay

ii. The security is rendered insufficient (not by chargee or chargor’s fault) and
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iii. The chargee is deprived of the whole or part of the security through a
wrongful act or default of the chargor
This remedy should only be pursued if the chargee has pursued other remedies
relating to charged land unless the chargee agrees to discharge the charge

91. Chargee’s action for money secured by charge.

1. The chargee may sue for the money secured by the charge only if—
a) the chargor is personally bound to repay the money;
b) by any cause other than the wrongful act of the chargor or chargee, the security is
rendered in sufficient and the chargee has given the chargor a reasonable opportunity to
provide additional sufficient security and the chargor has failed to provide that additional
security; or
c) the chargee is deprived of the whole or part of the security through or in consequence
of, a wrongful act or default of the chargor.
2. The court may order the postponement of any proceedings brought under this section until the
chargee has exhausted all other remedies relating to the charged land, unless the chargee agrees
to discharge the charge.

2. Appointment of Receiver
Section 92 LA power to appoint receiver over income of charged property implied in
charge instrument
After notice under Section 90 (1) the chargee has to wait a further 30 days before
appointing one
Appointment/replacement is in writing by chargee
Receiver is deemed to be chargor’s agent- he is given powers in the name of chargor
to take possession of property and deal with it by selling, leasing or charging.
Chargor is responsible for liabilities arising from acts of receiver.
Advantages- bank does not have the administrative burden of realization of security,
the receiver’s costs are recouped from the assets of the chargor-not more that 5% of
money received Section 92(7) LA
See priority of payment of money received by receiver- Section 90(8) LA

90. Appointment, powers, remuneration and duties of the receiver.

1. It shall be an implied condition in every charge that the chargee shall have the power to appoint
a receiver of the income of the charged land.
2. Before appointing a receiver under this section, the chargee shall serve a notice in the prescribed
form on the chargor and shall not proceed with the appointment until a period of thirty days,
from the date of the service of that notice, has elapsed.
3. A chargee shall appoint a receiver, in writing, and the chargee shall sign the instrument of
appointment.
4. A receiver may, at any time, be removed and a new receiver appointed, in writing, by the
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chargee.
5. A receiver appointed under this section shall be deemed to be the agent of the chargor for the
purposes for which the receiver is appointed, and the chargor shall, unless the charge instrument
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provides otherwise, be solely responsible for the acts and defaults of the receiver.

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6. The receiver shall have the power to demand and recover all the income of which the receiver is
appointed, by action or otherwise, in the name of the chargor, and to give effectual receipts for
the same.
7. The receiver shall be entitled to retain, out of any money received, all costs, charges and
expenses incurred by receiver and, for a commission at the rate specified in the appointment,
but not exceeding five per centum of the gross amount of all money, received, or, if no rate is so
specified at the rate of five per centum or any other rate as the chargor and chargee may agree
or if the appointment of a receiver comes before the court, which the court considers fit.
8. The receiver shall apply all money received in the following order of priority—
a) first, in the payment of all rents, rates, charges, taxes and other outgoings required to be
paid in respect of the charged property;
b) second, in keeping down all annual sums or other payments, and the interest on all
principal sums, having priority to the charge of which the receiver is appointed;
c) third, in payment of the receiver’s commission and expenses;
d) fourth, in payment of all reasonable expenses incurred in the doing of anything that a
receiver is required or entitled to do in respect of the charged land, including but not
limited to—
i. the payment of any premiums on any insurance policy properly payable under
the charge instrument; and
ii. the costs of undertaking necessary and proper repairs to any buildings comprised
in the charged land as directed in writing by the chargee,
e) fifth, in the repayment of any money paid or advanced by the chargee to meet the
reasonable expenses referred to in paragraphs (a), (b), (c) and
f) together with any interest on any amount so paid or advanced at the rate at which
interest is payable on the principal sum secured by the charge;
g) sixth, in payment of the interest accruing due in respect of any principal sum secured by
the charge;
h) seventh, in and towards the discharge of the principal sum secured by the charge, and
payment of the residue, if any, to the chargor or other person entitled to the charged
land.

3. Leasing
Section 93- follows the appointment of receiver
i. Lease can only be granted after 30 days upon expiry of notice
ii. To take effect in possession not later than 6 months after its date
iii. Reserve the best rent
iv. Not more that 15 years or length on term of charge whichever is shorter
v. Contain reasonable terms and conditions having the interests of the chargor
vi. Contain a declaration of appointment of receiver by chargee

4. Possession
Section 94 upon expiry of notice, the chargee can serve notice to enter and take
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possession at least one month after service of notice

Entry must be peaceful. Entry is achieved by taking the management of the property
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Banks usually avoid this due to the administrative inconveniences involved and
because they will be held liable for damage to property and account for profits and
rents.

94. Power of the chargee to take possession of the charged land.

1. Upon expiry of the period specified in section 90 (2) (b) and (c), a chargee may serve on the
chargor a notice of intention to enter, in the prescribed form, notifying the chargor that the
chargee intends to enter into possession of the whole or a part of the charged land at a date
that is at least one month from the date of the service of the notice.
2. A chargee may exercise the power of entry peaceably and any forcible entry-
a) entering into and taking physical possession of the land or a part of it peaceably and
without committing any forcible entry; or
b) asserting management or control over the land by serving a notice in the prescribed
form requiring any lessee of the chargor or any other owner of the land to pay to the
chargee any rent or profits that would otherwise be payable to the chargor.
3. The chargee shall be regarded as being in possession on the date—
a) on which the chargee enters into possession in accordance with of subsection (2) (a); or
b) on which the chargee first receives any rent or profit from the land.
4. A chargee who has entered into possession may remain in possession.
5. A chargee in possession shall be bound by all those covenants set out in of section 88 (1) (a) to
(e), (h), (i) and (j) as if that chargee were the chargor referred to in that subsection.
6. A chargee in possession of any charged land—
a) by occupation, shall be entitled to manage the land and take all its profits, but shall be
liable to the chargor for any act by which the value of the land, or any buildings on, or
other permanent improvements to the land are impaired or the chargor otherwise
suffers loss;
b) whether by occupation or by receipt of rents and profits shall be accountable to the
chargor not only for the sums actually received, but also for any additional sums that
the chargee might reasonably have been expected to receive by the careful and
business like exercise of the chargee’s powers;
c) may renew a lease granted by the chargor on the same terms as the original lease but
may not otherwise grant any lease out of the charged land.
7. A chargee in possession shall apply all money to the same payments and in the same order as
apply to a receiver as set out in section 92 (8), except that a chargee in possession shall not be
entitled to receive any payments under paragraph (c) of that subsection.
8. Any person on whom a notice under subsections (1) or (2) has been served shall forthwith
comply and continue to comply with that notice until either—
a) a notice of withdrawal in the prescribed form is served on that person by the chargee in
possession;or
b) the chargee in possession withdraws from that possession; or
c) a court orders the chargee in possession to withdraw from possession.

5. Chargee’s Power of Sale

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Section 96(1) LA where the chargor is in default of obligations under a charge and remains in
default upon the expiry of the demand under Section 90(1) the chargee may exercise its
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power to sell.

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Section 96 (2) Before exercising the power to sell the chargee must serve a notice to sell of
at least 40 days

96. Chargee’s power of sale.

1. Where a chargor is in default of the obligations under a charge and remains in default at the
expiry of the time provided for the rectification of that default in the notice served on the
chargor under section 90 (1), a chargee may exercise the power to sell the charged land.
2. Before exercising the power to sell the charged land, the chargee shall serve on the chargor a
notice to sell in the prescribed form and shall not proceed to complete any contract for the sale
of the charged land until at least forty days have elapsed from the date of the service of that
notice to sell.
3. A copy of the notice to sell served in accordance with subsection (2) shall be served on—
a) the Commission, if the charged land is public land;
b) the holder of the land out which the lease has been granted, if the charged land is a
lease;
c) a spouse of the chargor who had given the consent;
d) any lessee and sub-lessee of the charged land or of any buildings on the charged land;
e) any person who is a co-owner with the chargor;
f) any other chargee of money secured by a charge on the charged land of whom the
chargee proposing to exercise the power of sale has actual notice;
g) any guarantor of the money advanced under the charge;
h) any other person known to have a right to enter on and use the land or the natural
resources in, on, or under the charged land by affixing a notice at the property; and
i) any other persons as may be prescribed by regulations, and shall be posted in a
prominent place at or as near as may be to the charged land.

Copy of notice to sell to be served on

i. Commission
ii. Holder of the land out of which the lease has been granted if charged land is a
leasehold
iii. Spouse of chargor
iv. Co-owner of chargor
v. Any other chargee
vi. Guarantor
vii. Any other person with right to enter on and use the land or natural resources in it
viii. Any other person to be prescribed by regulations
NB:Required of service on all this people makes the process tedious and longer
In summary the following notices must be served;
i. 3 months demand Section 56(2) only if date of repayment is not provided or
demand is not made on the repayment date.
ii. If default continues for at least 1 month serve 3 month notice under Section 90(1)
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LA
iii. Forty days Notice under Section 96(2) LA
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iv. 45 days notice under the Auctioneers Act

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Power of sale- duties of chargee

Duty of care owed to chargor, guarantor any chargee under subsequent charge- Section
97(1) LA
Chargee owes duty to chargor to obtain best price not more than 25% below market value
(sale may be declared void) Section 97(3)
Property must be valued prior to sale Section 97(2) LA to determine its forced sale value.-
The chargor may apply to court to declare sale void if sold at a value that doesn’t meet this
threshold.
Section 99 LA confers protection on the purchaser if there has been irregularity in the sale,
he can claim damages against the person exercising the power
Sale to chargee upon court order
o S 79(9) LA a chargee shall not possess or sell land whose title document has been
deposited with the chargor under an informal charge without an order of the Court
NB the word ‘chargor’ here should read ‘chargee’
97.Duty of chargee exercising power of sale

1. A chargee who exercises a power to sell the charged land, including the exercise of the power to
sell in pursuance of an order of a court, owes a duty of care to the chargor, any guarantor of the
whole or any part of the sums advanced to the chargor, any chargee under a subsequent charge
or under a lien to obtain the best price reasonably obtainable at the time of sale.
2. A chargee shall, before exercising the right of sale, ensure that a forced sale valuation is
undertaken by a valuer.
3. If the price at which the charged land is sold is twenty-five per centum or below the market
value at which comparable interests in land of the same character and quality are being sold in
the open market—
a) there shall be a rebuttable presumption that the chargee is in breach of the duty
imposed by subsection (1); and
b) the chargor whose charged land is being sold for that price may apply to a court for an
order that the sale be declared void, but the fact that a plot of charged land is sold by
the chargee at an undervalue being less than twenty-five per centum below the market
value shall not be taken to mean that the chargee has complied with the duty imposed
by subsection (1).
4. It shall not be a defence to proceedings against a chargee for breach of the duty imposed by
subsection (1) that the chargee was acting as agent of or under a power of attorney from the
chargor or any former chargor.
5. A chargee shall not be entitled to any compensation or indemnity from the chargor, any former
chargor or any guarantor in respect of any liability arising from a breach of the duty imposed by
subsection (1).
6. The sale by a prescribed chargee of any community land occupied by a person shall conform to
the law relating to community land save that such a sale shall not require any approval from a
Community Land Committee.
7. Any attempt by a chargee to exclude all or any of the provisions of this section in any charge
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instrument or any agreement collateral to a charge or in any other way shall be void.
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99.Protection of purchaser
1. This section applies to—
a) a person who purchases charged land from the chargee or receiver, except where the
chargee is the purchaser; or
b) a person claiming the charged land through the person who purchases charged land
from the chargee or receiver, including a person claiming through the chargee if the
chargee and the person so claiming obtained the charged land in good faith and for
value.
2. A person to whom this section applies—
a) is not answerable for the loss, misapplication or non-application of the purchase money
paid for the charged land;
b) is not obliged to see to the application of the purchase price;
c) is not obliged to inquire whether there has been a default by the chargor or whether
any notice required to be given in connection with the exercise of the power of sale has
been duly given or whether the sale is otherwise necessary, proper or regular.
3. A person to whom this section applies is protected even if at any time before the completion of
the sale, the person has actual notice that there has not been a default by the chargor, or that a
notice has not been duly served or that the sale is in some way, unnecessary, improper or
irregular, except in the case of fraud, misrepresentation or other dishonest conduct on the part
of the chargee, of which that person has actual or constructive notice.
4. A person prejudiced by an unauthorised, improper or irregular exercise of the power of sale
shall have a remedy in damages against the person exercising that power.

Power of sale Conditions-

See Section 98 LA
Sale
i. may cover the whole or part of the land
ii. May be subject to or free of any charge or encumbrance having priority to the
chargee’s charge
iii. By way of subdivision
iv. By way of private contract at market value
v. By way of public auction-with reserve price
vi. For a purchase price payable in one sum or by instalments
vii. Subject to any other conditions of the chargee
There are therefore more ways in which the sale can be conducted.

DISCHARGE OF A CHARGE

Right to discharge in 2 forms:

1. Section 85(1) , Section102 LA gives right to discharge- upon payment of all money
secured by the charge and performance of all obligations under the charge before
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the land has been sold by chargee or receiver appointed. This right is in mandatory
terms
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2. Section 85(3) a charge instrument may provide that a chargor who wishes to
exercise their right of discharge before the expiry of the term of the charge shall give
one month’s notice, shall pay not more than one month’s interest at the rate at
which interest is payable as well as all other monies secured by the charge
3. It simply means the chargor has repaid the loan plus interest and penalties and the
chargee has released the title to the property used as security back to the chargor

Like the right of redemption it should not be fettered or clogged- See Section 85(2)
A discharge includes a re-conveyance, a re-assignment of charge
The mode of discharge to be adopted depends on how it was created
i. If the mortgage was created by way of assignment or a conveyance the discharge
will be in form of a re-conveyance or a reassignment
ii. If charge then a discharge of charge is prepared as per the prescribed form
Before sale or withdrawal from sale, the chargor may pay the amount due and the chargee
may discharge the charge and deliver to the chargor a discharge of charge and instruments
of title
The Chargor’s advocate prepares a discharge

Company Securities

Securities given by companies sometimes differ from those given by individuals.

i. Company charges are subject to registration under the Companies Act-Section 96
ii. A company can create a floating charge over its assets so that it remains free to deal
with the asset until specified events(e.g appointment of receiver) occur and the
charge then crystallizes over certain assets and becomes a fixed charge
iii. A company can create an irredeemable debenture
iv. Directors can act ultra vires their powers to borrow

Company Charges

Definition in S 2 CA is vague “debenture”-

– includes debenture stock, bonds and any other securities of a company whether
constituting a charge on the assets of the company or not
It is simply a document either creates a debt or acknowledges it.
Debentures can come as single or in a series
Part XXIII of the Companies Act deals with Company debentures
Charges may be given by the company to secure debentures
There are two types of company charges
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a) Fixed Charge
When made, immediately attaches or fixes on the ascertained property. The right
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and ability of the owner to continue to deal with it is immediately encumbered

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b) Floating Charge
While it creates an immediate security, it does not create an immediate
encumbrance on the title until certain events occur such as the appointment of
receiver and the charge then becomes fixed on the listed assets-crystallization

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LECTURE 12: FRIDAY 9 -23 SEPTEMBER 2016- MORNING SESSION (LECTURE

HALL A)

TOPIC 12: RIGHTS IN ALIENO SOLO

A) CAUTION/INHIBITION/RESTRICTION

Caution - A document sent to the Lands Registry by someone who may have a right over
land, which demands that no dealings in the land are registered until the person with the
right has been informed.
Caveat – a warning

Qualification of the Lodger

Claims a right (eg contractual) to an interest in land, lease, or charge which is capable of
creation by an instrument registrable under the Act
i. Is entitled to a licence
ii. Has presented a bankruptcy petition against the proprietor of registered land, lease
or charge
Effect
Forbid registration of dispositions and the making of entries affecting the land, lease or
charge.
Procedure
In prescribed form. Registrar may require an affidavit to accompany it
Registrar to give notice to proprietor after registering caution
Withdrawal can be by the cautioner, removal is by the Court or Registrar
Registrar may refuse further caution from same person in relation to same matter as in
previous caution
Punishment for wrongful cautions is liability in an action for damages Section 75 LRA
Court may order an inhibition forbidding registration in land Section 68 LRA
Restriction by registrar s 76 LRA to prevent fraud or improper dealing

Inhibition S 68-70 LRA Caution S71-75 LRA Restriction S 76-78

Order made by Court and Lodged for registration by any Registered by registrar to
registered by registrar one with an interest capable of prevent fraud or improper
registration dealing

No notice required to be given to No notice required to be given Notice requires to be given and
proprietor before its registration to proprietor before its hearings held before
registration registration.
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May endure for a particular Unless removed, it forbids May endure for a period, until
period or until the occurrence of registration of dispositions in the occurrence of an event or
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a particular event or further land lease or charge and making the making of a further order

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order of entries affecting the land,

lease or charge

PART VII—RESTRAINTS ON DISPOSITION

Inhibitions
68. Power of the court to inhibit registered dealings.
1. The court may make an order (hereinafter referred to as an inhibition) inhibiting for a
particular time, or until the occurrence of a particular event, or generally until a further order,
the registration of any dealing with any land, lease or charge.
2. A copy of the inhibition under the seal of the court, with particulars of the land, lease or charge
affected, shall be sent to the Registrar, who shall register it in the appropriate register.
3. An inhibition shall not bind or affect the land, lease or charge until it has been registered.

69. Effect of inhibition.

So long as an inhibition remains registered, any instrument that is inconsistent with the inhibition shall
not be registered.

70. Cancellation of inhibition.

The registration of an inhibition shall not be cancelled except in the following cases—
(a) on the expiration of the time stated in the inhibition;
(b) on proof to the satisfaction of the Registrar of the occurrence of an event stated in the
inhibition;
(c) on the land, lease or charge being sold by a charge, unless such sale is itself inhibited; or
(d) By a consequent order of the court.

Cautions
71. Lodging of cautions.
1. A person who—
(a) claims the right, whether contractual or otherwise, to obtain an interest in any land, lease or
charge, capable of creation by an instrument registrable under this Act;
(b) is entitled to a licence; or
(c) has presented a bankruptcy petition against the proprietor of any registered land, lease or
charge, may lodge a caution with the Registrar forbidding the registration of dispositions of the
land, lease or charge concerned and the making of entries affecting the land lease or charge.
2. A caution may either—
(a) forbid the registration of dispositions and the making of entries; or
(b) forbid the registration of dispositions and the making of entries to the extent expressed in the
caution.
3. A caution shall be in the prescribed form, and the Registrar may require the cautioner to
support the caution by a statutory declaration.
4. The Registrar may reject a caution that is unnecessary or whose purpose can be effected by the
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registration of an instrument under this Act.

5. Subject to this section, the caution shall be registered in the appropriate register.
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72. Notice and effect of caution.

1. The Registrar shall give notice, in writing, of a caution to the proprietor whose land, lease or
charge is affected by the caution.
2. A disposition that is inconsistent with the caution shall not be registered while the caution is
still registered except with the consent of the cautioner or by the order of the court.

73. Withdrawal and removal of caution.

1. A caution may be withdrawn by the cautioner or removed by order of the court or, subject to
subsection (2), by order of the Registrar.
2. The Registrar, on the application of any person interested, may serve notice on the cautioner
warning the cautioner that the caution will be removed at the expiration of the time stated in
the notice.
3. If a cautioner has not raised any objection at the expiry of the time stated, the Registrar may
remove the caution.
4. If the cautioner objects to the removal of the caution, the cautioner shall notify the Registrar,
in writing, of the objection within the time specified in the notice, and the Registrar shall, after
giving the parties an opportunity of being heard, make such order as the Registrar considers fit,
and may in the order provide for the payment of costs.
5. After the expiry of thirty days from the date of the registration of a transfer by a chargee in
exercise of the chargee’s power of sale under the law relating to land, the Registrar shall
remove any caution that purports to prohibit any dealing by the chargee that was registered
after the charge by virtue of which the transfer has been effected.
6. On the withdrawal or removal of a caution, its registration shall be cancelled, and any liability
of the cautioner previously incurred under section 74 shall not be affected by the cancellation.

74. Second caution in respect of the same matter.

The Registrar may refuse to accept a further caution by the same person or anyone on behalf of that
person in relation to the same matter as a previous caution.

75. Wrongful cautions.

Any person who lodges or maintains a caution wrongfully and without reasonable cause shall be liable,
in an action for damages at the suit of any person who has sustained damage, to pay compensation to
such person.

Restrictions
76. Restrictions.
1. For the prevention of any fraud or improper dealing or for any other sufficient cause, the
Registrar may, either with or without the application of any person interested in the land, lease
or charge, and after directing such inquiries to be made and notices to be served and hearing
such persons as the Registrar considers fit, make an order (hereinafter referred to as a
restriction) prohibiting or restricting dealings with any particular land, lease or charge.
2. A restriction may be expressed to endure—
a) for a particular period;
b) until the occurrence of a particular event; or
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c) until the making a further order is made, and may prohibit or restrict all dealings or only or the
dealings that do not comply with specified conditions, and the restriction shall be registered in
the appropriate register.
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3. The Registrar shall make a restriction in any case where it appears that the power of the

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proprietor to deal with the land, lease or charge is restricted.

77. Notice and effect of restriction.
1. The Registrar shall give notice, in writing, of a restriction to the proprietor affected by the
restriction.
2. An instrument that is inconsistent with it shall not be registered while the restriction is still
registered except by order of the court or of the Registrar.

78. Removal and variation of restrictions.

1. The Registrar may, at anytime and on application by any person interested or at the Registrar’s
own motion, and after giving the parties affected by the restriction an opportunity of being
heard, order that the removal or variation of a restriction.
2. Upon the application of a proprietor affected by a restriction, and upon notice to the Registrar,
the court may order a restriction to be removed, varied, or other order as it deems fit, and may
make an order as to costs.

DIFFERENCE
Caveats and Cautions Inhibitions and Prohibitions

prescribed forms by individuals court order

compensation if wrongly lodged no compensation

Under the Old Regime

CAUTIONS AND CAVEATS (QUASI-REMEDIES) -

These are really not remedies but are encumbrances.
Persons holding unregistered interest in registered properties can protect themselves by
registering cautions, caveats, inhibitions and prohibitions (restrictions against the title).
These are encumbrances as they fetter the rights of the registered proprietor to convey the
interest in the land against which the encumbrance is registered.
Caveats are lodged by any person who claims some defined interest in land capable of
registration e.g. mortgagee, lessee etc .
A caveat itself is an instrument which forbids the registrar from effecting any registration against
the subject title absolutely or unless the transaction is expressed to be subject to the claim of the
caveator or as is required by the caveat itself.
Caveats are bound under ITPA properties. Cautions belong to the RLA regime. It is a requisition to
the registrar requiring notice to be given to the cautioner before a registration is made under any
disposition by the registered owner of the land.
NOTE: Registrar can do something on title when a party other than the registered owner deals.
Consequently, it is important that when you lodge a caution, you routinely conduct searches on
the title, to ensure that the caution is in place.
This is because the caution is limited to actions by the registered owner only.
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The Registrar is not only bound to notify the cautioner e.g. by a JD action In both instances, i.e.
before you lodge a caveat or caution, you must support your claim by facts sworn in an affidavit
showing your interest which must be prima facie enforceable e.g. the claim of a scorned or
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A licensee can also lodge a caution. This is a way of protecting unregistered interests –s.131 RLA.
A caution will also be lodged by a petitioner in bankruptcy (s.131 RLA) to preserve the property.
This is a temporary protection that subsists until such time as one is able to convert this interest
into a registered interest i.e. pending litigation or settlement.
Thus, a caution can be very easily removed. It is often abused by the Lands Registry. If you lodge
a caution and the registered proprietor contests it, the registrar is under an obligation to notify
you to remove the caution and if you do not show cause of why the caution should not be
removed, the registrar will remove it.
If you lodge the caution unreasonably then you will be asked to pay compensation to any person
who has suffered as a result of the caution. NOTE: the same applies to caveats.
Inhibitions and prohibitions are also same as caveats and cautions but are issued by the court i.e.
a court order stopping any dealings in land for a particular period of time or until another order is
made.
Inhibitions – RLA s.128 and Prohibitions – GLA, RTA, LTA
The object is to protect registered interest from being defeated.

B) EASEMENTS
An easement is a non-possessory interest in another’s land allowing the holder to use the
land to a particular extent, to require the proprietor to take an act relating to the land or to
restrict the proprietor’s use to a particular extent and shall not include a profit (S2 LA)
There must be 2 pieces of land:
i. The land for the benefit of which any easement is created (dominant land)
ii. The land of the person by whom an easement is created (servient land)

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NATURE OF EASEMENTS
See Section 138 of Land Act
1. Right to do something over, under or upon servient land (positive easement) right of water,
right of way, right to run telephone lines on another’s land
2. Right that something should not be done (negative easement) eg easements of support, of
light, of air
3. Right to require the owner of servient land to do something over, under or upon their land
4. Right to graze livestock on servient land

138. Nature of easement.

1. Subject to any other written law applicable to the use of land, the rights capable of being created
by an easement are—
a) any rights to do something over, under or upon the servient land; or
b) any right that something should not be so done;
c) any right to require the owner of servient land to do something over, under or upon that
land;
d) any right to graze stock on the servient land.
2. The rights capable of being created by an easement do not include—
a) any right to take and carry away anything from the servient land;
b) any right to the exclusive possession of any land.
3. Unless an easement has been created for specific period of time which will terminate at a fixed
date in the future or on the happening of a specific event in the future or on the death of the
grantor, the grantee or some other person named in the grant, an easement burdens the servient
land and runs with the land for the same period of time as the land or lease held by the grantor
who created that easement.
4. Subject to the provisions of this part an easement shall be capable of existing only during the
subsistence of the land or lease out of which it was created.
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CHARACTERISTICS OF EASEMENTS

1. There must be a dominant tenement and servient tenement

The former tenement is one for the benefit of which the easement exists and the latter
tenement is one over which the easement is exercisable i.e.the one burdened by the right

2. The tenements must be owned by different people

3. The easement must accommodate the dominant tenement

The right must be connected with the normal enjoyment of the land e.g. a recreational
garden adjoining a residential house.

4. The easement must be capable of forming the subject matter of the grant
This is to the effect that the owner of the servient tenement should have been lawfully
entitled to grant the right claimed and the claimant must be a person capable of receiving
the grant. Thus the right must be certain and ascertainable.

RIGHT OF WAY

This is some form of Quasi easements-a form of implied easement.

Section 139 LA Entry Order: owner of dominant land may seek entry order from court to
enable him to enter the servient land for purposes of doing anything on the dominant land.
Under the Public Roads Access Act (cap 299) a land owner may apply to have a road of
access over another person’s property to a public road or railway line
Section 140 LA- access order. Owner of landlocked land may apply for access order
(analogous rights)

Rights of way
139. Entry on neighbouring land where easement is refused.
1. An owner of any dominant land) may apply to a court on the prescribed form for an order,
referred to as an entry order authorising his or her entry on or over any servient land for the
purpose of erecting, repairing, adding to, painting or demolishing the whole or any part of any
structure on the dominant land or doing any other necessary or desirable thing on that land.
2. The applicant shall give not less than fourteen days notice in writing to—
a) The owner of the servient land; and
b) The local authority having jurisdiction in the area were the dominant and servient land
are located, of the intention to apply for an entry order under this section.
3. On an application under subsection (1), the court after hearing the applicant and the persons to
whom notice was given under subsection (2), may make an entry order authorizing the
applicant to do all or any of the following—
c) to enter on or over the servient land, either personally or through the applicant's
employees, agents or contractors, for any purpose specified in the entry order;
d) to use for that purpose on or over the servient land any vehicles and other means of
transport and any plant machinery, cranes or other equipment as are specified in the
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entry order;
e) to store on the servient land such materials as may be required for the purposes of the
work and in any quantities that are specified in the entry order.
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to—
f) the nature and conduct of the negotiations if any, between the owners of the dominant
and servient land with respect to any attempt by the owner of the dominant land to
obtain an easement for the purpose for which the entry order is applied for from the
owner of the servient land;
g) the urgency, importance and desirability of the work for which the entry order is being
applied for;
h) the scope of the work and the length of the time for which the entry order is being
applied for;
i) whether the applicant has applied for or obtained all permissions, license and consents
required from all relevant public authorities to execute the works;
j) any other matters that shall appear to the court to be relevant.
5. An order made under subsection (3) may be made on any condition including—
a) the period of time during which the entry on or over the servient land is authorized;
b) the hours of the day during which the work may be done;
c) the preservation of the safety of persons or property on the servient land;
d) the preservation, so far as is consistent with the work to be executed, of the natural
features and condition of the servient land;
e) the restoration of the servient land to its former state at the conclusion of the work;
f) the maintenance of adequate access to the servient land;
g) the provision of security or indemnity to secure—
i. the performance of any conditions of the entry order; or
ii. the making good of any damage caused by entry on or over the servient land, or work
on or over the land; or (
iii. the reimbursement of the owner of the servient land for any costs, expenses or loss
arising from the entry; and (h) any other relevant matter.
6. If, as a result of fire, civil commotion or natural disaster, a structure on the dominant land has
become a threat to public safety or public health, and there is an urgent need to effect repairs
to or demolish that structure and such action may only be executed by entry on or over the
servient land, the owner of the dominant land may enter the servient land and effect the repairs
or demolition, after giving at least twenty-four hours’ notice in writing to the owner of the
servient land, but the entry and execution of works shall not prevent the owner of the servient
land from applying to the court for an order requiring the owner of the dominant land to make
good any damage caused by the entry and works and to reimburse the owner of the servient
land for any costs, expenses or loss arising from the entry and works.
7. In this section—
a) an owner of land includes an owner under a lease, a lessor and lessee; and
b) neighbouring land means any land in respect of which an order is sought under this
section, whether or not it adjoins the land occupied by the applicant for an entry order.
140. Access order.
1. An owner of landlocked land may apply in the prescribed form to a court for an access order,
granting reasonable access to that land.
2. A copy of the application shall be served on—
k) the owners of each piece of land adjoining the landlocked land;
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l) any person claiming an interest in any such piece of land of whom the applicant has
actual notice;
m) the local authority having jurisdiction in the area where the landlocked land is located;
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n) any other person occupying or having an interest in land which in the opinion of the

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court may be affected by the granting of the application.

3. The court, after hearing the applicant and any person served with an application under
subsection (2) may make access order in respect of any other piece of land, the owner of which
was served with a copy of the application under subsection (2), for the benefit of the landlocked
land.
4. In considering whether to grant an access order, the court shall consider—
c) the nature and quality of the access, if any, to the landlocked land when the applicant
first occupied the land;
d) the circumstances in which the land became landlocked;
e) the nature and conduct of the negotiations, if any, between the owners of the
landlocked land and any adjoining or other land with respect to any attempt by the
owner of the landlocked land to obtain an easement from one or more owners of the
adjoining or other land;
f) the hardship that may be caused to the applicant by the refusal of the access order, in
comparison to the hardship that may be caused to any other person the making of the
order;
g) the purposes for which access is or may be required; and
h) any other matter that appears to the court to be relevant.
5. An access order may be made subject to any conditions including—
a) the period for which the access order is to be made;
b) the payment of reasonable compensation by the applicant to any other person;
c) the allocation of the costs of any work necessary to give effect to the order between the
applicant and any other person;
d) the fencing of any land and the upkeep and maintenance of any such fence;
e) the upkeep and maintenance of any land over which the access order has been granted;
f) the execution of any instrument or the completion of any prescribed form or the doing
of any other thing necessary to give effect to the order;
g) any conditions set out in subsection (4) which in the opinion of the court are applicable
to an access order; and
h) any other relevant matter.
6. An access order made under this section shall be deemed to have all the characteristics and
incidents of an easement and the land over which it has been granted shall be deemed to be the
servient land and landlocked land shall be deemed to be the dominant land in respect of that
easement.

CREATION OF EASEMENTS

Section 98 LRA- creation of statutory easement either in the prescribed form or by grant or
reservation in the instrument of transfer or lease.
They may also be acquired by adverse possession under S32, 37 and 38 of the Limitation of
Actions, by 20 years peaceable, open, rightful and uninterrupted user, provided the action
claiming the right is instituted before the HC within two years of cessation of the user.
The easement should contain full particulars of
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i. Nature of easement, conditions, limitations or restrictions subject to which it is

granted
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ii. Period of time for which it is granted

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iii. Land or part burdened

iv. Land to benefit from easement
A plan sufficiently defining the easement should accompany it.

98.Creation of easement
1. An owner of land or a lessor may, by an instrument in the prescribed form, grant an easement
over the land, lease or a part of that land to the owner o f another parcel of land or a lessee for
the benefit of that other parcel of land.
2. The owner of land or a lessor referred to in subsection (1), who is transferring, assigning or
leasing land or a lease may, in the transfer, assignment or lease, grant an easement for the
benefit of the land transferred, assigned or leased over the land retained by him or her or
reserve an easement for the benefit of land retained by him or her.
3. An instrument creating an easement shall clearly specify ─
a) the nature of the easement and any conditions, limitations or restrictions subject to
which it is granted;
b) the period of time for which it is granted;
c) the land, or the specific part of it burdened by the easement; and
d) the land to benefit from the easement, and shall, required by the Registrar, include in a
plan that sufficiently defines the easement.
4. If a co-owner, by a disposition, severs any building or part of it or land separated by a common
dividing wall or other structure, whether that wall or other structure is a party wall or other
structure, cross-easements of support of the dividing wall or other structure in respect of the
severed buildings or land and the owners of the severed buildings or land shall be implied in the
disposition and their successors in title shall be entitled to the benefit subject to the burdens of
the cross-easements.
5. There shall be implied in every grant of an easement the grant of all ancillary rights which may be
reasonably necessary for the full and effective enjoyment of the grant.
6. A grant of an easement may contain an agreement between the owners of the dominant and
servient lands binding either or both of them to pay for or contribute towards the cost of
constructing, maintaining or repairing any way, wall, drainage, installation or work forming the
subject matter of the easement.
7. No easement and no right in the nature of an easement shall be capable of being acquired by any
presumption of a grant from long and uninterrupted use.
8. Nothing in this section shall prevent the lawful use of a right of way for persons and for stock
acquired and that right of way shall be deemed to be property.

CANCELLATION OF EASEMENTS (TERMINATION)

The modes of termination are specified in Section 99 Land Registration Act.
They are:
1. By duly executed release in the prescribed form;
2. Expiry of time;
3. By the occurrence of the event upon which the right was intended to determine;
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4. By the court;
5. Where the right has become obsolete or ceased to be of practical benefits; or
6. Where the termination will in no way injure the beneficiary of the easement.
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99.Cancellation and extinguishment of easements and analogous rights

1. Subject to subsection (3), an easement granted or an analogous right created under this Part may
be cancelled by the person occupying the dominant land.
2. Any cancellation pursuant to subsection (1), shall be effected in the prescribed form and the
easement, or analogous right shall be extinguished on the date that cancellation is recorded in
the register.
3. On the application of any person occupying servient land, the Registrar may cancel an easement
or an analogous right if the Registrar is satisfied that─
a) the period of time for which the easement or analogous right was intended to subsist has
expired; or
b) the event upon which the easement or analogous right was intended to terminate has
occurred
4. The consent of any lessee or lender for the time being entitled to the benefit of any easement or
analogous right shall be necessary for any cancellation of any such easements or analogous rights
and such consent shall be signified in the prescribed form.

C) WAY LEAVES
Way leave right of way over another land usually for installation of sewer, drain, power line
or pipeline.
Section 144 LA application by state department, county government, public authority or
corporate body to the commission.
The Government gives notice of way leave creation and compensates the owner

144. Application for way leave.

1. Unless the Commission is proposing on its own motion to create a way leave, an application, for
the creation of a way leave , shall be made by any State department, or the county government,
or public authority or corporate body, to the Commission.
2. An application shall be made in the prescribed form and shall be accompanied by any prescribed
information or other information that the Commission may,in writing require the applicant to
supply and the Commission shall not begin the process of creating a way leave until all prescribed
or required information has been submitted to it.
3. In order to enable a proposed way leave to be created by the Commission of its own motion to
comply with the provisions of this section, the Commission shall complete an application form as
if it were applying to create a way leave and references to "the applicant" in this Sub-part in
relation to an application to create a way leave shall be taken to apply as well to the Commission.
4. The applicant shall serve a notice on—
a) all persons occupying land over which the proposed way leave is to be created, including
persons occupying land in accordance with customary pastoral rights;
b) The county government in whose area of jurisdiction land over which the proposed way
leave is to be created is located;
c) all persons in actual occupation of land in an urban and per-urban area over which the
proposed way leave is to be created; and
d) any other interested person.
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5. The Commission shall publish the application along the route of the proposed way leave
calculated to bring the application clearly and in a comprehensible manner to the notice of all
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persons using land over which the proposed way leave is likely to be created.

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D) PROFITS

Profit a prendre (in french for right of taking) Right to enter another’s land and take
something usually natural resources from that land capable of ownership eg right to catch
fish, graze, hunt, cut trees, fetch clay, petroleum, minerals.
Note- A profit need not be appurtenant to the land
They are created and terminated in the same manner as easements.
You cannot have a profit to take away minerals and water. Why?

E) RESTRICTIVE AGREEMENTS

This is the restricting of the building on, or the user or other enjoyment of one piece of land
for the benefit of the proprietor of another land.
Section 2 LRA, LA restrictive agreement means
i. A restrictive covenant or
ii. An agreement by an owner of land restricting the building on, use or other
enjoyment of that land for the benefit of the owner of the land or neighbouring
parcel

When do RCs run with the land?

Where there is privity of estate only the benefits and burdens will run with at law and
equity, provided that they touch and concern the land.
Where there is neither privity of contract nor estate, the burden of RCs touching and
concerning the land runs in equity only- Tulk v. Moxhay.

Under the new land regime

Section 41(2) LRA no transfer shall contain a direction that the land shall be used or enjoyed
by the transferee in a particular manner.
Section 69 LA burden and benefit of covenants run with the reversion
i. There are no further provisions on restrictive covenants in the new land laws.
ii. They confer a negative duty on a neighbouring land eg to maintain a certain
standard of design

LAND REGISTRATION ACT

41 .Conditions repugnant to interest transferred.
1. A condition or limitation is void if it purports to—
a) restrain absolutely a transferee or any other person from disposing of the interest
transferred; or
b) determine the interest of the transferee on the happening of any future event or on the
failure of any future event to happen.
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2. Except as otherwise provided in this Act, no transfer of land shall contain a direction that the
land shall be used or enjoyed by the transferee in a particular manner.
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3. This section does not apply to Wakfs

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LAND ACT

69. Burden and benefit of covenants to run with the reversion.

1. If the interest held by the lessor under a lease, the reversion, ceases to be so held by the lessor,
whether by transfer, assignment, grant, operation of law or otherwise, then, unless a contrary
intention, expressly or impliedly, appears from the lease, or from any other circumstance—
a) the obligations imposed on the lessor by covenant of the lease run with the reversion
and may be enforced by the person who is from time to time entitled to the reversion;
b) the rights to the benefits of every covenant imposed on the lessee, that refers to the
subject matter of the lease, may be exercised and enforced by the person who is from
time to time entitled to the reversion against the person who is from time to time
entitled to the lease.
2. A person who becomes entitled to exercise a right to which subsection (1) (b) refers may exercise
the right even if it first became exercisable or accrued before the time at which that person
became so entitled unless before that time, the right was waived or the lessee was released from
the obligation to which the right relates.
3. If, in respect of a lease—
a) there has been a division of the reversion into different parts so that different persons
are lessors of the different parts; or
b) the lease has terminated in relation to the part of the land comprised in the lease, the
obligations referred to in subsection (1)(a) and the rights and remedies referred to in
subsection (1)(b) shall be apportioned, and to the extent required by that
apportionment, remain attached to each part of that reversion or to that part of the land
in respect of which the lease has not been terminated as the case may require and may
be enforced by the person entitled to enforce those obligations under subsection (1)(a)
and exercised by the person entitled to exercise those rights and remedies under
subsection (1)(b).

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LECTURE 13: FRIDAY 30 SEPTEMBER -14 OCTOBER 2016- MORNING

SESSION (LECTURE HALL A)

TOPIC 13: MISCELLANEOUS MATTERS

1. CO-OWNERSHIP
What is co-ownership, and what is its effect?

Where two or more people have simultaneous concurrent interests in land.

Where it occurs, a trust in land arises, with the legal estate being held by those to whom it is
conveyed as trustees for themselves beneficially.
i. Legal interest- Can only be held under a joint tenancy
ii. Beneficial interest- May be held under a joint tenancy or a tenancy in common.
A conveyance to co-owners should state how the beneficial interest is to be held.
If it does not, it will be held as joint tenants, unless words of severance have been used (in
equal shares, equally, half and half) or an equitable presumption of a TC arises (e.g. where
purchase money is provided in unequal shares; where property is purchased by a business
partnership).

Joint Tenancy
Joint tenants are all equally entitled to the whole property and do not have individual
shares.
If the property is sold, they are entitled to share the sale proceeds equally.
Crucial element is the right of survivorship- when a JT dies, his interest automatically accrues
to the remaining JT’s.

Severance of a joint Tenancy

It is possible to sever a JT of the equitable interest (though not of the legal)

It turns the JT into a TC in equity
It can be achieved in a variety of ways, including a written notice
Note-Severance must always take place when the tenants are alive, and cannot the effected
by will.
Bankruptcy automatically severs his beneficial interest.

Tenancy in common

The right of survivorship does not apply and on the death of one of the co-owners, the
equitable interest passes under the will or intestacy of the deceased co-owner.
They may own equal or un-equal shares in equity.
TC in equity is suitable where the co-owners wish to control the devolution of the equitable
383

interest.
Particularly appropriate for partners in a business who would not necessarily wish their
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share in the business to accrue to their partners automatically.

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What happens on death?

On death, the legal estate (held under a JT) will vest exclusively in the surviving partner
(because of survivorship) who will hold it on trust for himself and the estate of the deceased
partner.
As such the trust of land continues and a second trustee can be appointed to sell the
property to ensure the trust is successfully overreached.
Note- To avoid disputes about shares in a TC, they should be expressly agreed and recorded
in a deed of trust (or certified copy transfer).

Identifying JT or TC in the OC’s

Where co-owners have indicted that they will be holding property as TC’s, look for a
retriction similar to this:
No disposition by a sole proprietor of the registered estate (except a trust
corporation) under which capital money rises is to be registered unless authorised by
an order of the court
If NO such restriction appears the co-owners have indicated that they wish to hold the
beneficial interest as joint tenants

EXTENSION OF LEASES

The Lessee pre-emptive rights to allocation.

See Section 13 of the Land Act 2012

13. Lessee pre-emptive rights to allocation.

1. Where any land reverts back to the national or county government after expiry of the leasehold
tenure the Commission shall offer to the immediate past holder of the leasehold interest pre-
emptive rights to allocation of the land provided that such lessee is a Kenya citizen and that the
land is not required by the national or the county government for public purposes.
2. The Commission may make rules for the better carrying out the provisions of this section, and
without prejudice to the generality of the foregoing, the rules may provide for the following.
a) Prescribing the procedures for applying for extension of leases before their expiry.
b) Prescribing the factors to be considered by the Commission in determining whether to
extend the tenure of the lease or re-allocate the land to the lessee.
c) The stand premium and or the annual rent to be paid by the lessee in consideration of
extension of the lease or re-allocation of the land.
d) Other covenants and conditions to be observed by the lessee.

Under Section 4(1) & (2) Physical Planning Act. The Director is mandated, amongst other
things, to: Advise the Commissioner of Lands and local authorities on the most appropriate
use of land including management such as change of user, extension of user, extension of
384

leases, subdivision of land and amalgamation of land.

For the avoidance of doubt, any lease granted to a noncitizen shall not exceed ninety-nine
years.
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ISSUANCE OF TITLE DOCUMENTS

See Section 24-26 LRA

24. Interest conferred by registration.

Subject to this Act—
a) the registration of a person as the proprietor of land shall vest in that person the absolute
ownership of that land together with all rights and privileges belonging or appurtenant thereto;
and
b) the registration of a person as the proprietor of a lease shall vest in that person the leasehold
interest described in the lease, together with all implied and expressed rights and privileges
belonging or appurtenant thereto and subject to all implied or expressed agreements, liabilities
or incidents of the lease.

25. Rights of a proprietor.

1. The rights of a proprietor, whether acquired on first registration or subsequently for valuable
consideration or by an order of court, shall not be liable to be defeated except as provided in this
Act, and shall be held by the proprietor, together with all privileges and appurtenances belonging
thereto, free from all other interests and claims whatsoever, but subject—
a) to the leases, charges and other encumbrances and to the conditions and restrictions, if
any, shown in the register; and
b) to such liabilities, rights and interests as affect the same and are declared by section 28
not to require noting on the register, unless the contrary is expressed in the register.
2. Nothing in this section shall be taken to relieve a proprietor from any duty or obligation to which
the person is subject to as a trustee.
26. Certificate of title to be held as conclusive evidence of proprietorship.
1. The certificate of title issued by the Registrar upon registration, or to a purchaser of land upon a
transfer or transmission by the proprietor shall be taken by all courts as prima facie evidence
that the person named as proprietor of the land is the absolute and indefeasible owner, subject
to the encumbrances, easements, restrictions and conditions contained or endorsed in the
certificate, and the title of that proprietor shall not be subject to challenge, except—
a) on the ground of fraud or misrepresentation to which the person is proved to be a party;
or
b) where the certificate of title has been acquired illegally, un-procedurally or through a
corrupt scheme.
2. A certified copy of any registered instrument, signed by the Registrar and sealed with the Seal of
the Registrar, shall be received in evidence in the same manner as the original.

See also Section 30 LRA

30. Certificate of title and Certificate of lease.

1. The Registrar may, if requested by a proprietor of land or a lease where no certificate of title or
certificate of lease has been issued, issue to him or her a certificate of title or a certificate of
385

lease, as the case may be, in the prescribed form showing, if so required by the proprietor, all
subsisting entries in the register affecting that land or lease.
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2. Notwithstanding subsection (1)-

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a) only one certificate of title or certificate of lease shall be issued in respect of each parcel
or lease; and
b) no certificate of title or certificate of lease shall be issued unless the lease is for a certain
period exceeding twenty-five years.
3. A certificate of title or certificate of lease shall be prima facie evidence of the matters shown i n t
he certificate, and the land or lease shall be subject to all entries in the register.
4. If there is more than one proprietor, unless they are tenants in common, the proprietors shall
agree among themselves on which of them shall receive the certificate of title or the certificate
of lease, and if they fail to agree, the certificate of title or the certificate of lease shall be filed in
the registry.
5. The date of issue of a certificate of title or certificate of lease shall be noted in the register.

LOST OR DESTROYED TITLE

See Section 33 LRA

33.Lost or destroyed certificates and registers

1. Where a certificate of title or certificate of lease is lost or destroyed, the proprietor may apply to
the Registrar for the issue of a duplicate certificate of title or certificate of lease, and shall produce
evidence to satisfy the Registrar of the loss or destruction of the previous certificate of title or
certificate of lease.
2. The Registrar shall require a statutory declaration to be made by all the registered proprietors,
and in the case of a company, the director, where property has been charged, the chargee that
the certificate of title or a certificate of lease has been lost or destroyed.
3. If the Registrar is satisfied with the evidence proving the destruction or loss of the certificate of
title or certificate of lease, and after the publication of such notice in the Gazette and in any two
local newspapers of nationwide circulation, the Registrar may issue a duplicate certificate of title
or certificate of lease upon the expiry of sixty days from the date of publication in the Gazette or
circulation of such newspapers; whichever is first.
4. If a lost certificate of title or certificate of lease is found, it shall be delivered to the Registrar for
cancellation.
5. The Registrar shall have powers to reconstruct any lost or destroyed land register after making
such enquiries as may be necessary and after giving due notice of sixty days in the Gazette.

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RECTIFICATION OF TITLE

This can be done in two ways

1. By the Registrar
2. By the Court

1. By the Registrar

See Section 79 LRA

79. Rectification by Registrar.

1. The Registrar may rectify the register or any instrument presented for registration in the
following cases—
a) in formal matters and in the case of errors or omissions not materially affecting the
interests of any proprietor;
b) in any case and at any time with the consent of all affected parties; or
c) if upon resurvey, a dimension or area shown in the register is found to be incorrect, in
such case the Registrar shall first give notice in writing to all persons with an interest in
the rectification of the parcel.
2. Notwithstanding subsection (1), the Registrar may rectify or direct the rectification of a register
or document where the document in question has been obtained by fraud.
3. Upon proof of the change of the name or address of any proprietor, the Registrar shall, on the
written application of the proprietor, make an entry in the register to record the change.
4. The Commission may by regulations prescribe the guidelines that the Registrar shall follow
before rectifying or directing rectification under subsection (2) and without prejudice to the
generality of the foregoing, the regulations may provide for –
a) the process of investigation including notification of affected parties;
b) hearing of the matters raised; and
c) the criteria to be followed in coming up with the decision.

2. By Court

See Section 80 LRA

80. Rectification by order of Court.

1. Subject to subsection (2), the court may order the rectification of the register by directing that
any registration be cancelled or amended if it is satisfied that any registration was obtained,
made or omitted by fraud or mistake.
2. The register shall not be rectified to affect the title of a proprietor who is in possession and had
acquired the land, lease or charge for valuable consideration, unless the proprietor had
knowledge of the omission, fraud or mistake in consequence of which the rectification is sought,
or caused such omission, fraud or mistake or substantially contributed to it by any act,neglect or
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default.
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RIGHT TO INDEMNITY

Any person suffering damage by reason of –

a) any rectification of the register under this Act; or
b) any error in a copy of or extract from the register or in a copy of or extract from any
document or plan certified under this Act
Shall be entitled to indemnity (See Section 81 LRA)
The amount of indemnity shall not exceed (See Section 82 LRA)
i. the value of the interest at the time when the mistake or omission which caused the
damage was made, if the register is not rectified; or
ii. the value of the interest immediately before the time of rectification, if the register
is rectified.
The procedure is by application to the court (See Section 83 LRA)

81. Right to indemnity.

1. Subject to the provisions of this Act and of any written law relating to the limitation of
actions, any person suffering damage by reason of –(a) any rectification of the register under
this Act; or (b) any error in a copy of or extract from the register or in a copy of or extract
from any document or plan certified under this Act, shall be entitled to indemnity.
2. No indemnity shall be payable under this Act to any person who has caused or substantially
contributed to the damage by fraud or negligence, or who derives title, otherwise than
under a registered disposition made bona fide for valuable consideration, from a person
who caused or substantially contributed to the damage.

82. Amount of indemnity.

An indemnity awarded in respect of the loss of any interest in land, shall not exceed—
a) the value of the interest at the time when the mistake or omission which caused the damage
was made, if the register is not rectified; or
b) the value of the interest immediately before the time of rectification, if the register is
rectified.
83. Procedure for claiming indemnity.
The Court may, on the application of any interested party, may determine whether a right of
indemnity has arisen under this Part and, award indemnity, and may add any costs and expenses
properly incurred in relation to the matter.

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COMMUNITY LAND

Dealings in community land is governed under the Community Land Act N0.27 of 2016
The Act gives efficacy to Article 63 (5) of the Constitution
It is described as AN ACT of Parliament to give effect to Article 63 (5) of the Constitution; to
provide for the recognition, protection and registration of community land rights;
management and administration of community land; to provide for the role of county
governments in relation to unregistered community land and for connected purposes.(See
Preamble of the Act)
A "community" means a consciously distinct and organized group of users of community
land who are citizens of Kenya and share any of the following attributes-(See Section 2 CLA)
a) common ancestry;
b) similar culture or unique mode of livelihood;
c) socio-economic or other similar common interest;
d) geographical space;
e) ecological space; or
f) ethnicity.

DEFINITIONS

There are a few definitions that are important (See Section 2 CLA)

Communal Use of Land

"communal use of land" means holding or using land in undivided shares by a community;

Community Land
"community land" means includes-
a) land declared as such under Article 63(2) of the Constitution;
b) land converted into community land under any law;

Community Land Register

"community land register" means the community land register established under section 8 of the Land
Registration Act, 2012;

Community Land Registration Unit

"community land registration unit" means at area declared as such under section 10 of the Land
Registration Act;

Community of Interest
"community of interests" means the possession or enjoyment of common rights, privileges or interests
in
land, living in the same geographical area or having such apparent association;
389

Community Reserve Land

"community reserve land" means any land set aside for communal or land allocated by the registered
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community for individual occupation and use;

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Community Tenure System

"community tenure system" means unwritten land ownership practices in certain communities in which
land is owned or controlled by a family, clan or a designated community leader;

Customary Land Rights

"customary land rights" refer to rights conferred by or derived from African customary law, customs or
practices provided that such rights are not inconsistent with the Constitution or any written law;

The ownership of community land is vested with the community and may be held under
either (See Section 4 (3) CLA)
a) Customary
b) Freehold
c) Leasehold
Customary Land Rights are adjudicated and registered and have equal force in law similar
with freehold and leasehold acquired through allocation, registration or transfer.(See
Section 5 (3) CLA)
County governments shall hold in trust all unregistered community land on behalf of the
communities for which it is held. The respective county government shall hold in trust for a
community any monies payable as compensation for compulsory acquisition of any
unregistered community land.
A county government shall not sell, dispose, transfer, convert for private purposes or in any
other way dispose of any unregistered community land that it is holding in trust on behalf of
the communities for which it is held.(See Section 6 CLA)
Community land maybe held- (See Section 12 CLA)
a) as communal land;
b) as family or clan land;
c) as reserve land; or
d) in any other category of land recognized under this Act or other written law.

A customary right of occupancy in community land shall in every respect be equal in status
customary rights or and effect to a right of occupancy granted in any other occupancy
category of land and shall, subject to this Act, be (See Section 14 CLA)
a) capable of being allocated by the community to an individual person, family, group of
persons, clan, an association, partnership or body corporate wholly owned by citIzens of
Kenya;
b) capable of being of indefinite duration; and
c) governed by customary law in respect of any dealings.
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PROCEDURE REGISTRATION OF COMMUNITY LAND

i. The community land registrar will invite members of the community i.e. with communal
interest to elect members of the community land management committee. The invitation is
through a public notice in at least two newspapers of wide national circulation.
ii. The notice shall also be given to the national county administrators and county government
administrators in the area where the community land is located.
iii. The community shall elect between seven and fifteen members from among themselves to
be the members of the community land management committee who shall come up with a
comprehensive register of communal interest holders.
iv. The community land management committee shall come up with the name of the
community and shall submit the name, register of members, minutes of the meeting and the
rules and regulations of the committee to the Registrar for registration.(See Section 7 CLA)

INTEREST CONFERED UPON REGISTRATION

The registration of a community as the proprietor of land shall vest in that community the
absolute ownership of that land together with all rights and privileges belonging or
appurtenant thereto; and
The registration of a community or a person as the proprietor of a lease shall vest in that
community or person the leasehold interest described in the lease, together with all implied
and express rights and privileges belonging or appurtenant thereto and subject to all implied
or express agreements, liabilities or incidents of the lease. (See Section 16 CLA)
The certificate of title issued by the Registrar upon registration, or to a purchaser of
community land upon a transfer or transmission by the proprietor community shall be
considered by courts as prima facie evidence that the person named as proprietor of the
land is the absolute and indefeasible owner, subject to the encumbrances, easements,
restrictions and conditions contained or endorsed in the certificate, and it shall not be
subject to challenge, except-
a) on grounds of fraud or misrepresentation to which the person is proved to be a party; or
b) where the certificate of title has been acquired illegally, unprocedurally or through a corrupt
scheme. (See Section 18 CLA)

ADMINISTRATION OF COMMUNITY LANDS (See Section 15 CLA)

A registered community shall have a community assembly which shall consist of all adult
members of the community.
The quorum for decision making by the community shall not be less than two thirds of the
community assembly.
The community assembly shall elect between seven and fifteen members of the community
assembly to constitute the community land management committee.
The functions of the community land management committee shall be to-
i. have responsibility over the running of the day to day functions of the community;
ii. manage and administer registered community land on behalf of the respective
community;
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iii. coordinate the development of community land use plans in collaboration with the
relevant authorities;
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iv. promote the co-operation and participation among community members in dealing
with matters pertaining to the respective registered community land; and
v. prescribe rules and regulations, to be ratified by the community assembly, to govern
the operations of the community.

CONVERSION OF THE COMMUNITY LAND

The Community land register shall, in addition to the particulars set out under section 8(1) of
the Land Registration Act, 2012, contain the particulars of all conversions involving
community land.

Land Registration Act

8. Community Land Register.

1. Subject to the legislation on community land made pursuant to Article 63 of the Constitution,
there shall be maintained in each registration unit, a community land register in which shall be
kept—
a) a cadastral map showing the extent of the community land and identified areas of
common interest;
b) the name of the community identified in accordance with Article 63(1) of the
Constitution and any other law relating to community land;
c) a register of members of the community;
d) the user of the land;
e) the identity of those members registered as group representatives;
f) the names and identity of the members of the group; and
g) any other requirement as shall be required under the law relating to community land.
2. The Registrar shall issue a certificate of title or certificate of lease in the prescribed form.
3. The Registrar shall not register any instrument purporting to dispose of rights or interest in
community land except in accordance with the law relating to community land.
4. For the avoidance of doubt the provisions in this section shall not apply to unregistered
community land held in trust by county governments on behalf of communities under Article
63(3) of the Constitution.

A registered community shalI, before the conversion of registered community land into any
other categories of land seek and obtain approval from two thirds of the assembly in a
special meeting convened for that purpose.

a) Community to Public (Section 22 CLA)

Community land may be converted to public land by-

a) compulsory acquisition;
b) transfer; or
c) surrender.
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Reversionary interest of such land shall lie with the community in the first instance upon
expiry of such public use interest.
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Transfer of community land shall, subject to the approval of the members of the registered
community in a community meeting, be done in accordance with the Land Act, 2012 and any
other applicable law.

b) Community to Private (Section 23 CLA)

Registered community land may; subject to the approval of the registered community, be
converted to private land through-
a) transfer; or
b) allocation by the registered community, subject to ratification of the assembly as
provided in section 21(2).

c) Private Land to Community Land (Section 25 CLA)

Private land may be converted to community land by-

a) transfer;
b) surrender;
c) operation of the law in relation to illegally acquired community land; or
d) operation of any other written law.

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