Guest post by Samuel G. Njenga
Paul and I met this broker who was introduced to us by a friend in Rongai. This was on a cold Thursday morning sometimes in August 2010. The guy went ahead and showed us a very nice 2 acre piece of land around Rimpa, some place between Rongai and Kiserian. It had an old building and was on sale. We felt the price quoted by the owner was quite low. However, the story went that the owner was liquidating a lot of his assets due to financial constraints hence the low figure quoted. We expressed interest in the property and the broker called the owner who apparently was in Kiserian. We therefore decided to drive on to Kiserian and meet the guy.
On reaching Kiserian we navigated our way to some dingy looking pub where the owner was having a drink with some other guys. We got shocked because in front of us was a former KANU bigwig who seemed a shadow of his former self. The guy looked unkempt and in comparison to the man I knew in his hey days, it seemed like life had not be rough on him. He had a unique look and it was not possible to mistake him for someone else. I just realized how fast the tide can turn against you especially when in the political cold.
After the intros, we told the old man that we were interested in his property. He told us that we are not the first to express interest and if we really wanted the property, then we needed to make a commitment as fast as possible. Red flag?! Indeed yes, coupled with the fact that he was a former politician (another red flag), I knew we had to trend carefully. We informed the guy that however much we want the land we needed to confirm it is OK by way of carrying out an official search. He informed us that he is to travel to Kericho the day after so if we wanted his land then we had to move fast. We promised to revert back to him as soon as we had the search. No-one should ever force you into a quick deal before you perform the necessary due diligence.
As we departed for Nairobi, I called my contact in Kajiado and gave him the LR number so that he does the search. At around 4pm, my contact in Kajiado called me. He is usually a funny fellow but from his first words, he sounded shocked. He told me that he had the search with him and it was like none he had ever seen before. I was quite curious to know what was therein. He called me by my name and told me, “I thought I told you to be very careful with some of the land you keep attempting to buy”. I told him am usually careful and I do the best I can. “Forget about that land”, he retorted. He went ahead to inform me that the search had so many encumbrances to an extent that they could not fit in the space availed for listing them on the search document.
When I received the search the day after, it made some interesting reading. It had as many as 4 entries other than the normal entries of the name of the proprietor and when the title deed was issued. The 4 entries were as below:
1. A restriction that no dealing will be registered on the land unless the registered owner appears in person.
2. Caution by some guy claiming lender’s interest.
3. Charge in favour of a financier.
4. Further charge in favour of the same financier.
In total the land was charged to the tune of 9M and it was only worth 3M at the time we viewed it. I am sure by the time of the charge which was around 2004, it must have been worth 300k. How the charging was done for such a value, don’t ask me.
An official search is a confirmation by the respective land registry on behalf of the government on the ownership and status of a particular title. It shows the following details:
1. Title number, search number and the date the search was done.
2. Nature of title: Absolute or lease.
3. Approximate Area in hectares
4. Name and address of proprietor and whether a title deed has been issued to the proprietor.
5. A section on inhibitions, cautions and restrictions.
6. Encumbrances section (leases, charges etc.)
7. Pending applications
The search document details are filled based on the content of the green card upon and must be signed and sealed by the Registrar. For a title to be clean, then No.s 5 to 7 must be nil. If not, and especially section 6, a charge entry must have a corresponding discharge entry to free the charge. A title with the any unresolved issues in No.s 5 to 7 is not transferable.
A quick look at the title document itself:
Other than confirming the title number, the approximate area of the plot/land and the proprietor details, one needs to confirm the entries in the proprietor section (part B) which should tally with the entries on the search. Take note of the date the title was issued and confirm it is the same with what appears on the search. There is also the need to have a look at any entries in section C (encumbrances section) because therein they list them. Any entry in this section must be accompanied by a signature by the registrar. Remember the following important points:
• A charge entry must be accompanied by a discharge entry for the same amount and by the same chargee to release the charge.
• A caution can only be removed by the entity that placed the caution, same with restriction.
• If you come across a discrepancy in the proprietor details as in names, nature of title and approximate area, then be very careful. Take for example a discrepancy in the name of the proprietor (e.g. use of initial in the title as compared to full names in the ID), the legal process get quite interesting where the proprietor must go through a correction of names in the title. The process starts with swearing an affidavit, the same is presented to the registrar who writes some letter to the area chief, who must identify the proprietor and give them a letter. The proprietor must then present themselves to the relevant Land Control Board to get consent to change the name and he/she takes all the docs to the registrar for the change to be effected. Quite a procedure.
Special circumstances when you can proceed with a deal when a title is encumbered:
For developers who are financed, the titles for the land they are developing are usually charged by the financier. What normally happens, in the case when a customer who pays up for a house, a partial discharge for the specific title to the unit is done hence freeing it from the charge and allowing for the transfer to proceed. So whenever you carry out a search for the title of the house you want to purchase, you should not be worried to find it charged by a financier because essentially it’ll undergo a discharge and the transfer will be executed. However, a vacant plot / land must be free from encumbrances.
Next lesson will dwell on understanding a sales agreement, I know most people have signed it but they were not sure what some clauses meant.