[BUYING AND SELLING REAL ESTATE IN KENYA]
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KEY FACTS OF REAL ESTATE ACQUISITIONS UNDER KENYAN LAW
STANDARD FORMS OF AGREEMENTS A. The transaction usually begins with a letter of offer from the seller setting out the purchase price, completion period, description and details of property and any other salient terms of the intended purchase. The purchaser is given a time within which he may or may not accept the offer. Issuance of letters of offer is not mandatory, however if the letter of offer and acceptance is made it may be deemed to be a contract. B. Most parties prefer to enter into a formally binding sale agreement. In Kenya, any transaction for sale of land must be in writing as provided under Section 3(3) Of the Law of Contract Act. Contracts for sale of land must also be witnessed by a registered Advocate. C. There are many forms of sale agreement and parties are free to choose the terms of sale. Section 38 of the Land Act provides that no suit can be brought in a breach of contract case unless the agreement is in writing. D. The Law Society of Kenya provides a model sale agreement and the Law Society Of Kenya Conditions Of Sale 2015. Most agreements adopt this format except where any clause is specifically omitted/exempted in the agreement between the parties. BROKERS A. Each party is free to appoint a broker to act on their behalf in the transaction. Broker fees are paid as per the commission/agency agreement between the appointing party and the broker. B. Real estate agents are licensed under the Estate Agents Act. Fees are guided by Legal
Notice 198 of 2012 or by agreement between the parties. C. The relationship between the parties is governed by separate agency agreement between the parties. Agreement should conform to the Consumer Protection Act as far as full disclosure and representations are concerned. BUYER’S INSPECTIONS A. Due diligence on seller: - for individuals’ verification on identification numbers and tax numbers, for registered bodies undertake a search of the business and company to verify ownership and company status. B. Due diligence on title deed: - land verification search to ascertain ownership and presence of any encumbrances and other overriding interests on the land such as long-term leases, mortgages, easements, and cautions. The due diligence is also to ascertain the permitted user of the land as residential, commercial, industrial, or other user. Search done on Ardhi Sasa Online Platform. ( www.ardhisasa.lands.go.ke) C. Due diligence on other documentation: - Verification of regulatory approvals and compliance checks. Verification of building permits, architectural plans, survey maps and other documents D. Physical due diligence: - Buyer physically inspects the property by viewing beacons, land boundaries. If the buyer is purchasing a building, then he/she physically inspects the building. If the buyer is buying a building off-plan, then he/she will inspect the show house to ascertain standards. Most contracts of sale are sold on “as is basis, “therefore necessitating physical inspection.
ILN Real Estate Group – Buying and Selling Real Estate Series
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