What is in this official search document?

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.

What is a FAKE TITLE DEED?

Guest post by Samuel G. Njenga

A deed is a signed agreement especially about the ownership of property or legal rights. A Title deed is a legal document providing somebody’s right to property and subsequently ownership.

Then what is a deed plan? This is a signed plan by the Director of Surveys showing the precise particulars of a surveyed piece of land. It shows the details as in the shape of the plot, the distances and bearings all-round the plot, scale of plotting, Deed plan number, land reference no., size of the plot in hectares, signature of the Director of Surveys, the date of authentication by the Director of Surveys and above all it shows if the plot is a New Grant or an extension of lease. This is practice is under the provisions of Registration of Titles Act (RTA). This deed plan once it is duly prepared, it is attached to a certificate defining the current owner and any endorsements by the relevant Registrar in the event the property has changed hands or there are encumbrances therein whatsoever relating to the plot.

What about a mutation? Under the Registered Land Act (commonly referred to as Cap 300) the mutation form shows how a bigger land (mother) mutated into smaller pieces and the details of the proprietor (Names, ID, box number and signature). It further shows the date the surveying was done. It also details the subdivision details (existing roads, LR numbers of the resultant plots, the exact measurements of the plots and their areas in hectares). Other signatures therein include the one of a licensed / district surveyor and the land registrar who prepared the resultant titles. This document is ordinarily forwarded to survey of Kenya for purposes of amending the RIM (Registry Index map) which basically keeps track of all subdivisions in a specific area.

Then what is the meaning of the word “fake”? To make something false appear genuine.

From the foregoing therefore, a fake title deed is a false replica of a genuine Title deed where it could have all the attachments but does not relate to any physical piece of land. Equally it purports to confer a right that doesn't exist.

In early 1990's there was the infamous 13th floor of Ardhi House where false documentation was done to support surveys and issuance of Title deeds by the unsuspecting authorities. This floor was in reference of a room in River Road Nairobi. After all Ardhi house goes up to 12th floor. The fraudsters could therefore generate documents including allotment letters, Part Development Plans (PDP) and all that appertains to excision of land from the Government land (GL). They could even go ahead and file these documents in the files of the Ministry of lands using inner house staff of the Ministry at a small fee. That is the point where corruption sets in the process. It even becomes difficult for the Ministry to trace the entry point of the fake documents in the Ministry’s genuine files. Where allocation of a genuine plot is substituted with the “fake” one it becomes even more complex to unearth the conversion stage from a genuine Title deed to a fake one.

Would a naked eye be able to identify a fake title? From the aforementioned info, it gets very tricky because most fake titles are replicas of the original, meaning the details therein are the same. How then can you tell it is fake? It is pretty hard, but the easier approach is to tell a fake owner because obviously the ‘owner’ should have other document especially the ID card. We also have document experts who can verify the title. Most security companies / experts can verify IDs. Banks when financing land deals use experts to detect forgeries of titles and IDs. If you carry out proper due diligence you should get to know if the owner is the real one and if the documentation is proper.

By the way, other than fake titles, whenever then you transact with plots, take time to carry out proper due diligence to establish the history and more importantly the conception process of the plot. Only then you will tell the plot was grabbed or was acquired the right way. Else you could invest on a road reserve where caterpillars of the Ministry of Roads will be your obvious guests. In this case no compensation by the state will come your way as the rights of the society surpasses individual interest.

A green card is a document that holds original records of all transactions relating to a piece of land/plot. This means at the issuance of a new title, it must be preceded by opening a card for it. Any subsequent transactions relating to the plot/land are recorded there. Normally when a subdivision is done, a green card will be opened for each sub-plot  Maybe the seller had reached the stage where the card had already been opened but the title not yet issued. However, that is the last and the easiest process when subdividing land. The green card is applicable to the registered Land Act and is resident at the district land registry level.

We also got the white card applicable to Registration of Titles Act, mostly leases and is resident at Ardhi house as well as at the district level; they are usually put together in binders.

Finally, do you know that an official search at the land registry office is not sufficient due diligence?? I’ll expound more in the next topic as we look at how to carry out a comprehensive due diligence you can carry out to protect yourself from getting conned when purchasing land.

Our next lesson will be on paying due diligence before investing in real estate.