COUNCIL OF LEGAL EDUCATION

KENYA SCHOOL OF LAW

________________________

THE ADVOCATES TRAINING PROGRAMME

_______________________

CONVEYANCING
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ATP 107
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4TH MARCH 2015

Joe Kadendi Wachosi

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KENYA SCHOOL OF LAW

CONVEYANCING
(2015)
Teaching and Assessment
Teaching:

The course is of ten months duration. There will be 1 x 2 hours

weekly sessions over approximately thirty (30) weeks

Assessment:

20% Coursework and 60% End of session written examinations, 20% Oral
Exams

Recommended Text Books

The books that we are recommending this year are:
1. Bowman & Tyler. The Elements of Conveyancing (Lond) 8th Ed. Sweet &
Maxwell.
2. P.L. Onalo Land Law and Conveyancing in Kenya
3. Wanjala Smoking. Land Law & Disputes in Kenya (Nrb) Oxford University
Press, 1991
4. Robert Abbey & Mark Richards A Practical Approach to Conveyancing (Lon)
Blackstone Press 2000.
5. Tom Ojienda Conveyancing Principles and Practice. (Nbi) 2008

The following books may also be useful for further insight.

1. G.H. Treitel The Law of Contract (Lond) 11th Edition Sweet
i. & Maxwell, 2005
2. I.C.F. Spry The Principles of Equitable Remedies (Lond) Sweet &
i. Maxwell, 1997
3. Diane Chappelle Land Law (Lond) Longman,2008

The following Statutes are mandatory

5. The Land Registration Act No. 3 of 2012
6. The Law of Contract Act (Cap 23) Laws of Kenya
7. The Registration of Documents Act (Cap 285) Laws of Kenya
8. The Sectional Properties Act No. 21 of 1987
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The following Statutes are optional for further insight and reference.
1. The Laws of Property Act 1925 U.K.
2. The Land Control Act (Cap 302)
3. The Estate Agents Act (Cap 533)
4. Rent Restriction Act (Cap 296)
5. The Equitable Mortgages Act (Cap 291)
6. Landlord & Tenants (Shops Hotels & Catering Establishments) Act (Cap 301)
7. Distress for Rent Act, (Cap293) of the Laws of Kenya
8. The Auctioneers Act 1996, and the Auctioneers Rules 1997
9. The Companies Act, (Cap 486) of the Laws of Kenya.
10. Students are encouraged to familiarize themselves with the provisions of the National
Land Policy for Kenya Session paper No. 3and the Constitution 2010, The Land
Registration Bill, the Land Bill and the national Land Commission Bill all of 2011.

Aims and objectives

The main objective of the course is to ensure that the students obtain an understanding of the
general principles of conveyancing law and practice and to familiarize the students with the
concepts and protocols of conveyancing. This enables the students to identify the critical stages
in 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 also designed to ensure that the students appreciate the role of a lawyer as the
necessary intruder in conveyancing transactions. Thirdly the course is also intended to ensure
that the students develop 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 to understand all the procedures preceding registration including valuation
stamping and obtaining the requisite consents and clearances.

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OUTLINE OF COURSE
A. INTRODUCTION TO CONVEYANCING
The subject introduces and covers the history of conveyancing generally, firstly in the United
Kingdom (1535) and then in Kenya from 1897. The basics in land law are covered especially the
various interests and tenures in land. The element also introduces all the applicable statutes and
their purport.
The nature debate and the conceptual framework of conveyancingis discussed.
Is conveyancing

i.

Contractual,

jurisdictional or is it a

hybrid of both?

Historical Background of land law and conveyancing:

England from 1535 through 1925
Kenya 1900 through 1987 and today.

ii.

iii.

Conveyancing ;definition and scope

conveyance defined; duties of a conveyancer as outlined.

conveyancing defined

Terminology used generally in conveyancing

Language and form of documentation under the various land laws

Applicable laws
LTA
LRA
-Law of Contract Act (Cap 23)
The formality of writing and the necessity thereof;

v.

vi.

Registration

The formality of registration

Effect and import of registration

Of Leases and non registration thereof.

Priority of registered documents

References
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Texts : Wanjala* (supra)

(A must for those who have not studied Land Law)
Bowman & Tyler ; generally
Ojienda Chapter 1 and 2 generally
Anderson ,S Of Licences and Similar Mysteries 42 MLR 203
Statutes : Statute of Frauds 1677
Law of Contract Act (Cap 23)-S.3(3)
Case law:

Tulk vs. Moxhay (1843-60) All. E.R. 9.

JumaMuchemi Vs. WaweruGatonye (HCCC) No. 853 of 2002

Momanyi Vs. Hatimy 2003 WLR 545

Rogan Kamper Vs. Grosvenor (1977) KLR 123

MbuiVs Mbui (2005) 1 E.A 256

NBK Limited vs Wilson N Ayah and Anor (eKLR 2009) (CACA 119 of 2002).

Gatimu Vs. MuyaGathanji (1976) K.L.R 265

TengHuan Vs. SweeChuan 1992 1 WLR 113

Echaria Vs. Echaria C.A.C.A (Kenya) eKLR

B. BASIC REQUIREMENTS IN CONVEYANCING

This element runs the student through the basic requirements of conveyancing. The student
should at the end of the element be able to appreciate the requirements of execution, attestation
and verification of signatures, as well as the need for consent, clearances, stamp duty and
registration.
i.

Execution, Attestation and Verification.

ii.

Clearance Certificates

iii.

Consents

Realm of controlled transactions

Other consents - Commissioner of Lands, Railways, Local Authorities, and Lessors.

iv.

Stamp Duty and consequences thereof in various transactions

v.

Power of Attorney(s) special, specific and general

vi.

Registration.

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Inside the Lands Registry

Text: Ojienda Chapter 2
Statutes:
Valuation for Rating Act (Cap 266) generally
Rating Act (Cap 267) - S.21
Stamp Duty Act generally
Land Control Act (Cap 301)S.2-9.
Law of Contract Act-S.3
LRA
Case law :
Barclays Bank PLC Vs. OBrien (1994) 1A.C. 180
Labelle Intern Ltd Vs. Fidelity Bank Ltd (2003)2 E.A 540
Mucheru Vs. Mucheru (2002) 2E .A456
Bains Vs. Chogley (1949) 16 K.L.R. 27
Articles :Moriarty (1984) LQR 376
Cooper (2003) OUCLJ 201
Hopkins,N Conscience, Discretion and Creation of Property Rights (2006) 26 Leg Studies 475
Hopkins ,N Acquiring Property Rights from Uncompleted Sales of land 61 MLR

C. 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 is to be taken through the period before the conveyancing and be able to demonstrate
that acting on the clients instructions the student will be able to identify the clients goals and be
able to advise the client from the point of view of a seller, a buyer, a mortgagor, a mortgagee, a
lessor and 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 especially of Surveyors, Planners, Architects,
Valuers, Estate Agents, e.t.c.

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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.
Parties to a transaction
Purchaser - Vendor, Lessee-Lessor, Mortagee-Mortgagor, Surveyors, Planners
Advocates, Valuers, Estate Agents & their respective roles

The Initial Client Interview

Instructions and brief

Investigation of title
Pre contract inquiries and mis-descriptions
Searches, necessity of Official& Personal, historical, pre-contract, pre & post
registration

Deduction of title and requisitions.

Inspection of property
References
Text : Robert Abbey & Mark Richards pp 88-158
Ojienda Chapter 4

Statutes : RTA-s.79
RLA-ss.30,36,43
GLA-s.127
LTA-s.31
Legal Notices No146-153 of 2005
See also:
Estate Agents Act Cap 533
Advocates Act Cap 16 Remuneration Order
Case law :

Barclays Bank Plc Vs. OBrien (1994) 1 A.C 180(on initial interview and duty to advise)

Mortgage Express Ltd VsBowerman& Partners (1996) 2 All E. R 836

Rajdip Housing Development Company vs J. WaciraWambugu CACA 4 of 1991

Mapis Investment (K)Limited vs Kenya Railways Corp. CACA 14 of 2005

Shah vsAkiba Bank Limited 2005 2KLR 424, 2006 2 EA 323

Gitwanyi Investment Limited vsTajmal Limited and 2 Others 2006 2 EA76

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AG vs KCB Limited &Afraha High School (2004 eKLR)

D. THE CONTRACT STAGE

The element takes the student through the preparation and execution of the contract documents
for conveyancing purposes. 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 the characterization of the parties to the transaction as well as contents
of the Sale Agreement whilst being conscious to the freedom of the parties to contract as they
may wish.

Law of contract and basic requirements of an enforceable contract generally.

Drafts and engrossments.

General conditions of sale.

Law Society Conditions 1989 Edition

Special Conditions of Sale

Various Purchasing situations and obligations of Advocates.

Particulars of Sale
Property
Fixtures and fittings and the doctrines of annexation and maximum user
Consideration

Deposits, as a special condition

Nature
Stakeholders and Agents
Forfeiture
Possible Reforms

Professional undertakings, general rules of undertakings, breach and misconduct,

obligations imposed by undertakings, which is bound by undertaking, ambiguous
undertakings, etc.

Completion
Completion notices and time of the essence clauses.

LSK completion - Postal or Physical

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Auctions

Transmissions

Executors and Administrator

Insolvency

Court ordered transmissions

Compulsory acquisition

Texts:
Ojienda Chapter 3
Robert Abbey & Mark Richardss p52-87,261-291
Handout: Check lists for both advocate for buyer & for seller
Statutes:
Law of Contract Act Cap 23 -s.3
ITPA ss.53-55
RLA S.38 (3) & Law Society Conditions of Sale
Case law: Barclays Vs Messenger (1989) 3 All E R 492(deposits)
Universal CorpnVs Five Ways Properties (1997) 1 All E. R
MuchiraVsGesima Power Mills Ltd (2004) 2 E.A 168

E. SUBLEASES & SECTIONAL PROPERTIES

F. TRANSFERS STAGE Various Transfer Instruments/Deeds

RLA Transfers

Indentures of conveyance

Indentures of Assignment

Leases and subleases

Deeds of transfer; ad hoc or statutory format?

Title documents (issuance, loss and replacement)

Survey and subdivision sales

Development Conveyancing.

G. MORTGAGES AND CHARGES

Definitions , distinctions and terminology

charge and mortgage

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equitable or legal
further and second

Duties and responsibilities of the Lenders/Borrowers Advocates. Third party

mortgages/charges

Covenants in a mortgage/charge and import thereof

Remedies of the mortgagee/chargee

under RLA
under ITPA

Reconveyances, reassignments, discharges

Statutes:
RLA- S.65
ITPA - S.58,S.69,S.98,S.100
RTA - S.46, 47, 48, 49
RLA - S.81
Case Law and Articles:
Ngeny vs. KCFC Ltd (2002) 1KLR 295
Labelle Intern Ltd vs. Fidelity Commercial Bank (2003) 2E.A. 541
Simiyuvs. HFCK Ltd (2001) 2 E.A. 540
Eros Chemist Ltd vs. Trust Bank Ltd (2000) 2 E.A. 552
Maranyavs. NBK Ltd (1995-8) 1 E.A. 177
Cuckmere Brick Co. Ltd. vs. Mutual Finance Ltd (1971) 2 All R.R. 633
Sajabivs.Amreliwalla (956) E.A. C.A. 71
Aberdare Investments Ltd vs. HFCK Ltd (1999) 2 E.A. 1
Royal Bank of Scotland VsEtridge(2001) 4 All E R 449
Fehlberg, B TheHusband, the Bank, the Wife and her Signature (1994) 57 MLR

H. LEASES AND LICENCES

Definition and Distinction

Essentials of a Lease

Implied Conditions & Express Covenants

Assignment and Determination

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Regime of the Rents Acts

Duties of the Conveyancer

Texts:
Chesires Modern Law of Real Property PP.381-512
Robert Abby & Mark Richards pp 291-24
GibsonsConveyancing 20thedpp 391-525 (Further reading)
Statutes :
RLA S.3, 45-64
RTA S.40,41,42,43,44 and 45
ITPA S.5 105-117
Rent Restriction Act (Cap 296) Laws of Kenya
Landlord & Tenants (Shops, Hotels and Catering Establishments) Act Cap 301)
Case Law:
1. Street vs. Mountford (1985) A.C.
2. Birmingham Vs. Ross (1883) 38 Ch-D 295
3. Aldin vs. Latmer 1894 Ch. 437
4. Facchini Vs. Bryson 1952 T.L.R. 1386
5. Hetch Vs. Morgan 1957 E.A. 741
6. Runda Coffee Estate Vs. Ujagar Singh 1962 E.A. 564.
7. Sykes Vs. Midland Bank Executor & Trustee (1970) 2 All .R. 471

Caveats and cautions, RTA S.57, RLA S.131,132,133,134 & 135

Easements, profits, restrictive agreements, and way leaves, extinction of interests

in land, extension of leases

I. PARTS OF A PURCHASE DEED

1. DOCUMENTS UNDER GLA, RTA & LTA

Commencement and Date, note parties and their description

Recitals

Operative Part

Covenants & Declarations

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Testimonium

Execution & Attestation.

2. DOCUMENTS UNDER RLA

Parcels clause

Date

Execution & Attestation

K. CONSTRUCTION OF A CONVEYANCE DEED AND RULES GOVERNING

CONSTRUCTION OF DOCUMENTS
Specific and general rules governing construction of document

L. REMEDIES IN CONVEYANCING
Statutory,common law or equity?

Damages & Rescission

Specific performance and related equitable remedies

Statutory Rectification ,statutory damages,indemnification& other statutory

remedies

Statutory indemnity

Cautions and Caveats as pseudo remedies

Texts : I.C.F.Spry(supra)
Statutes :

Section 143 RLA

Section 69 ITPA

Course Instructors:

Joe Kadendi Wachosi

J. Louis Onguto&E.KokiMbulu& Eunice Arwa

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CONVEYANCING LAW & PRACTICE

INTRODUCTION
Conveyancing has been defined as the process by which legal title to property is transferred
(Abbey & Richards, 2000, 18).The Council of Licensed Conveyancers in England and Wales on
the other hand defines Conveyancingas the legal process of transferring a house or flat,
commercial property orpiece of land from one owner to another. 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.It may thus be more appropriate to define Conveyancing as
the art or science of conveying or 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 the
process, the legal title and the transfer or modification.
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.

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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).

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

In this suit the respondent prayed for, among other reliefs, 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. 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.
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 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
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(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
(iii) 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 courts 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.
Section 9 makes provision for qualifications for practicing as an advocate, and the qualifications
include having in force a current practicing certificate. No person shall be qualified to act as an
advocate unless
(a) He has been admitted as an advocate; and
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(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 practising
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.

GenerallyConveyancers duties are wide and varied and are not limited to merely drafting
the conveyance and registering the same.
The duties include:
Advising clients on buying and selling process + effect of transferring an interest
in land
Investigating title
Drafting the K with sale details, offers, leases, transfer
Liasing with lenders, estate agents, Advocates, etc
Paying taxes e.g. Stamp duty, land rent, VAT, CGT, Rates
Keeping records of payments and finally preparing a completion statement
Perfecting the documentation including proper execution, completion and
registration

DUTIES OF ADVOCATES IN CONVEYANCING TRANSACTIONS

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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.
Vendors Advocate
Obtain information on:Full names of the parties, full particulars of the property, the price, whether any deposit is
required, details of encumbrances (if any), whether the property is vacant, expected date of
completion, prepare the sale agreement, obtain original title document from vendor, approve
transfer/conveyance, procure execution of transfer/conveyance, receive and account for the
proceeds of the sale to vendor., obtain rates, rent clearances, consents where required, obtain
discharge of charge/reconveyances.
Purchasers Advocate
Obtain information on:-finances taxes and legal costs and expenses of the conveyance,
scrutinizing of title documents, investigation of title, approving sale agreement, preparation of
transfer/conveyance and engrossing the same, attending to execution of the conveyance or
transfer where necessary, stamping and lodging of documents where necessary, obtaining and
paying the purchase price to the vendors advocates.

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.

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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 with the
client as well as meetings in the office or outside the office with the client. Make diary entries of
important dates such as completion dates or search priority records.
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].

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. This view has been restated by the
court in the case ofKing woolen Mills and another v. Kaplan and Stratton Advocates6

In this case, the firm named Kaplan and Stratton had acted for both the borrower and the lender
in a borrowing transaction. The firm had prepared all the relevant documents, including the
security 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
6Civ.

App. No.55/93

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privy to information pertaining to the appellants 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.
Both parties should consent.

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: JumaMuchemi V WaweruGatonye HCCC No.853 of 2002 NBI
Momanyi V Hatimy 2003 KLR 545

HISTORY
Conveyancing law in Kenya, like other branches of law has drawn its history mainly from
English Law. Up till 1535 the English medium of transferring an interest in land was vide the
primitive method of surrendering to the Lord of Manor the subject parcel of land and his
Lordship in turn granted the same to the transferees nominee. The earliest and most important
form of conveyance however was the feoffment. This involved no formalities save in the form of
a ceremony known as livery of seisin (delivery of possession). The feoffment 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 the presence
of witnesses mainly feudal lords. The law then also recognized facts of leases, assignments,
exchanges and partitions. [Note the enactments of 1535 Statute of Uses and 1536 Statute of
Enrolments, the 1677 Statute of Frauds which introduced the requirements of writing, execution
and attestation, the Real Property Act 1845, Land Transfer Act 1875, Vendors & Purchasers Act
1874 and finally the most important of them all the 1925 Law of Property Act which like the
Registered Land Act Cap 300 Laws of Kenya was intended to simplify conveyancing.The 1925

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statute established a formal register and also introduced state indemnity to those deprived of their
land or title.

Reflection: The conveyancing instrument to be drafted depended on the interest to be transferred

and the statutes played no role:true or false?
The history of conveyancing in Kenya can be traced to the turn of the 19th Century. Like most
laws, the relevant statutes were also transplanted the last being the Registered Land Act in 1963
which was an even imitation of the Law of Property Act 1925 (U.K).

The first relevant conveyancing statute enacted in Kenya was the 1901 Registration of
Documents Act (RDA).

Section 4 of the Act requires/d that documents conferring property

interest be registered within the month of its making to ensure its availability in evidence.
Registration of a transaction under the RDA guarantees no title but is merely evidence of the
occurrence of a transaction. Under the RDA certain conveyancing documents are still registered
to give efficacy to some conveyancing transactions. These documents include; Trust Deeds,
Powers of Attorney and Building Plans. Next was the Land Titles Act 1908 (LTA) which was
intended to help deal with the haphazard deserted parcels at the Coastal strip of the country.
The LTA also guarantees no title. In 1915 the Government Lands Act (GLA) was enacted to deal
with conveyancing and land titles in the interior hinterland. It introduced a more systematic
approach to registration and provided for Deed Plans for all parcels of land to the registered. The
title under the GLA was usually the last Indenture of Conveyance (Freeholds) or
Assignment (Leaseholds).In 1920 the Registration of Titles Act (RTA) was enacted. It was
based on the Australian Torrens system as to systematic certainty of title. It provided for
registration of and guarantee of titles. It attempted to make conveyancing simple by introducing
statutory conveyancing form albeit not mandatory. The title document under the RTA is either
a Grant or Certificate of Title or a Lease.
The Registered Land Act (RLA) enacted in 1963 tried to modernize conveyancing. The Act
borrowed heavily from the 1925 English Law of Property Act. Unlike the RTA, the RLA made
the use of statutory conveyancing forms mandatory(S.108). Thetitle document under the RLA
was a Title Deed/Land Certificate (for absolute proprietorship) or Certificate of Lease (for
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leaseholds) or a Certificate of Sectional Property if it is a property under the Sectional Properties

Act. Both were issued at the request of the registered proprietor and upon payment of the
requisite fees.

The Land Registration Act of 2012 was later enacted to repeal the RLA LTA

RTA GLA and ITPA.

Reflection: what is the Torrens System? Of what relevance is it today nearly 150 years since a
non-lawyer in Sir Robert Torrens cropped up with it in Australia?

FORMALITY OF WRITING IN CONVEYANCING

One cannot buy land the way one would buy a newspaper or a loaf of bread. The contract must
be in writing executed by both parties and attested. This is a mandatory statutory
requirement.1Section 3(3) of the of the Law Contract Act provide that:
(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 by a
licensed auctioneer within the meaning of the Auctioneers Act, 1996 nor shall anything in that
subsection affect the creation or operation of a resulting, implied or a constructive trust.
Under Section 44(1) of the LRA every instrument effecting any disposition under the Act shall
be executed by each of the parties consenting to it, in accordance with the provisions of this
section. And this is by of appending a persons signature on it or affixing the thumbprint or other
mark as evidence of personal acceptance of that instrument.

Section 3 of Law of Contract Act Cap 23 Laws of Kenya

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The formality of writing serves three purposes: Evidentiary, Protective and Forensic. The
formality of writing performs the forensic (of or used in court of law) function in providing
simple yet conclusive evidence of the fact of agreement. The Statute of Frauds 1677 expressly
provided that the requirement of writing was intended to guard against the fraud.
Formality of writing also performs a useful evidentiary function in encouraging precision and
recording the result for posterity. Writing helps to avoid disputes as to what interest has been
or is intended to be conveyed. Remember too that land can generate an array of interests from its
original form in the freehold estate.
Thirdly, it is argued2 that the formality of writing performs the protective function of giving
parties a chance to reflect and think on the deal before executing a binding contract that they may
wish so shortly before the ink is dry to renege on. It is stated that if the agreement was to be oral
there would be no time for reflection on the deal per se. This function has been reinforced further
by the requirement of independent legal advise to be given by a qualified conveyance.Under
The Evidence Act there are some agreements that must be in writing.

Reflection: Are these arguments conclusive?e.g.has writing gotten rid of fraud in

conveyancingand how often do we make sensible decisions orally?]

Formality of Registration in Conveyancing

Conveyancing is complete only once registration is effected. Registration is the keeping of
records of land transactions in the Lands Register. It involves registration of both the title and as
well as the interest. What is registered is usually the title or ownership to land and any instrument
dealing with land or the disposal thereof. The purposes of registration include:

enabling the Government to keep track of user and easier collection of revenue;

simplifying dealings in land registration and also avail certainty and security of title
or tenure;

2Moriaty,

Reduction of unnecessary litigation in matters relating to land.

Enables easy dealings in land transactions

1984 LQR 376) (Ojienda,2008)

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Security of tenure: A registered proprietor acquires an indefeasible tile against the whole world.
The security of tenure acquired through registration also gives the property, owner a right to
indemnity from the Government where there is fraud or an error in the Register. See LRA 81-84
Ss, but note the qualification in S. 80(1).
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 acquires an
indefeasible title against the whole world.
Prevention of re-fragmentation of land: Registration helps to determine whether or not a
particular piece of land can be sub-divided because his tide details pertaining to the land, such as
acreage, will have been noted in the Register.
Facilitation of Government property tax administration: Through registration, the
Government is able to identify persons/property owners on whom to levy tax in respect of a
particular piece of land and also keep track of the Government's planning programmes.
Efficient administration and facilitation of the loan system: The security of title which flows
from registration makes it possible for property owners to obtain loans from financial
institutions. A prospective purchaser has more faith dealing with an owner whose land is
registered.
Prevention of concealed dealings in land: Registration gives publicity to land transactions.
Since the register is a public document and is therefore open to the public, it is possible to
ascertain who owns what interest in land.

Upon registration of the land or conveyance the registered proprietor acquires an indefeasible
title against the whole world [cf. Section 24 of the Land Registration Act No. 3 of 2012].
Registration is effected at the relevant Lands Registries.
Care must be taken that the conveyancing instrument is not only presented at the proper Registry
but is also signed/registered by the proper Registrar.

What is registered? Title (land) and interest (servitudes,encumbrances,quasi-encumbrances).The

latter includes charges, leases, easements, profits, restrictive agreements or covenants3. The

(see Tulk v-s Moxhay [1843-60] All E. R 9)

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former involves the estates namely allodiums, fee-simple, freeholds and leaseholds which also
rank as limited interests.

Effect of Registration
Pursuant to Section 24 of the LRA 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 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.
One becomes an absolute owner of the title or interest registered. [Reflection: How absolute is
absolute?]

Pursuant to section 25 of the LRA 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 under the 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) Overriding interest (S. 28 LRA)
See also: National Prov. Bank Limited vs- Hastings (1964) Ch 9
Mbui vs- Mbui (2005) I E. A 256
Marigi Vs Marigi 1996 LLR 463
Ogongovs.Ogongo CACA 29/2003
Esiroyo vs- Esiroyo (1973) E.A.

Effect of Non-registration
Non-registration means simply that there is no interest passedat least in rem. See however Section
30 (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.
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Section 26LRAprovidescertificate of title to be held as conclusive evidence of proprietorship

unless obtained by way of fraud or misrepresentation or where it has been acquired illegally,
unprocedurally or through a corrupt scheme.
See also Rogan Kamper vs. Grosvenor 1977 KLR 123, Clarke vs.Sondhi (1963) E.A.,
Merali vs. Parker (1956) 29KLR 26, Bains -Vs- Chogley (1949)

Reflections: On a proper construction of Section 30 of the LRA, rightsconcerningland give no

proprietary quality unless registered true & false? cf.

S. 30(3) LRA.

Registration only creates more to the whole world and no more.

Cautions and caveats effect of,

Overriding interests

Abstract matrimonial property rights

Echaria vs- Echaria

C.A.C.A 75/2001

Kivuitu vs- Kivuitu C.A.C.A 26 of 1985

Lord Melvin Blackburn Vs Lady Blackburn ( Malindi HCCC No. 87 of 2007)
Married Womens Property Act 1882. S. 17

Adverse possession
Wambuguvs.Njuguna 1983 KLR 172

Proprietary estoppel.
TengHuanvs.SweeChuan 1992 1 WLR 11

NB

Registration at the Companys Registry under Section 96 of the Companies Act (Cap
486) is required where a Company creates a Charge over its parcel of land. Companies
Form 214. use of,

Registration at the Registrar of Co-operative Societies.

Purpose in both instances:

Create a secured creditor vis--vis insolvency

Notice to prospective Debentures- holders.

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Under Section 44(1) of the LRA every instrument effecting any disposition under the
Act shall be executed by each of the parties consenting to it, in accordance with the
provisions of this section. And this is by of appending a persons signature on it or
affixing the thumbprint or other mark as evidence of personal acceptance of that
instrument.

Reflections on Registration:Where is registration effected? Who effects it? When is it

deemed to have been effected? What is registration subject to? What is (must be)
registered?

INSIDE A LANDS REGISTRY:A CONVEYANCERS NIGHTMARE OR PYRRHIC?

1. Filled Valuation Forms lodged with the Collector of Stamp Duty for purposes of valuation
Particulars of property Form filled by conveyancer
Valuation for Stamp Duty Requisition Form filled by the Collector
and sent to Chief Government Valuer for valuation. This is only applicable
where the document is a transfer or Deed of Conveyance
2. Document stamped and dutypaid at the Banks (KCB/NBK) then document lodged for
registration
3. Document presented in duplicate together with all relevant requisite documents e.g. original of
the governments valuation report, consent, clearance certificate, original title,e.t.c
Fill out application for registration in quadruplicate.
Pay registration fees.

500/=

4.UponPresentation of document and a day book number given entered into a register and date
and time of presentation endorsed on the document for purposes of priority
-See Sec 27 RDA4
The time of presentation of doc ,not execution or date thereof , counts to pass interest.
5. taken to audit and Government Auditor ascertain stamp/duty,taxes-rent,rates, have been paid.
6. Left for matching with the Deed or Parcel files from the strong room

Section 27 of the RDA cap 285, the day upon which a document is presented for registration shall be deemed to be the date of
registration.
4

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7. Registration proper commences with the Registry- in charge of marking the documents for
action in
a register known as the A book
First is verification of document by an officer in the registry: detection of any defects
Second is Inspection of the title by an officer to ensure title is clear and registration can
proceed
Third is Entry of particulars of interest being acquired.
8. Document is then passed to relevant Registrar for execution and ultimate registration
Registrar vets it again and then signs in approval or rejection with reasons
9. In epilogue:
Document is photocopied (except RLA documents)
Sealed with Land Registrys Seal (except GLA documents)
Released to owner.If RTA,RDA,GLA or LTA the Registry keeps a photocopy,if RLA the
Registry keeps the original and releases the counterparts.
Reflection:Why does it take more than 14 days to complete such a simple looking process?

PRE CONTRACT PERIOD AND INVESTIGATION OF TITLE

Of 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

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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 also the case ofMapis
Investment (K) Limited vs. Kenya Railways Corporation C.A.C.A 14 of 2005 and section 18 of
cap 5335.
It is otherwise a positive transgression of the law to practice as an estate agent when one is not
registered6and the message passed by the Court of Appeal in the MapisCaseis that a transaction
may be declared null and void and unenforceable ex turpicausa. 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.
Rajdip Housing Development Company Limited vs. J. W. Wambugu t/a Wambugu& Company
Advocates
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.

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
Section 18 provides(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 practice as an estate agent unless he is a registered estate agent;
(b) no partnership shall practice 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 practice 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.
6 Ibid
5

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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 verbafortiusaccipiuntur contra preferentem. Also unless otherwise shown the
presumption is that the advocates for the vendor prepare the Agreement of Sale.
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
transaction may also invite other innominateparties. 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.

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.

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Planners (control of developments and subdivisions within local authorities)

Planners must be registered under the Physical Planners Registration Act no.3 of 1996.

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

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.

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?

Of the Initial Client Interview

Prior to the formation of an enforceable contract an Advocate will have an initial client
interview. The purpose of the initial client interview is to firstly gather all the relevant facts
pertaining to the intended transaction and secondly afford crucial advise to the client on
transactions generally and the particular transactions specifically. There is utter need to prepare
well for the interview. The facts and instructions to be ultimately obtained at the initial client
interview will depend on each transaction but ordinarily one will be interested in:Details of the parties: names, capacity, advise on co-ownership [cf. Barclays Bank PLC vs.
Obrien (1994) 1AC 180, Shah V Akiba Bank Limited (2005) 2 KLR. At the initial interview,
look at their capacities. For instance if the client is a minor, you advise the client to use a trustee.
If transferred to the minor there are repercussions because the minor will not be able to transfer

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the property or deal with the property as he/she may please. Or in certain circumstances the
trustee may even misuse the property.
The issue of joint tenancies where such systems are recognized by registration systems.
Distinguish joint tenancy and tenants in common. In joint tenancies the interest is bound and if a
tenant dies then the other tenants gets the share of the deceased tenant. A lawyer can be sued if
unmarried couples are advised to take up joint tenancies. In co-ownerships if advising a
mortgagor it is critical to ask the wife to obtain independent legal advice as this came from many
common law cases like:Barclays bank PIC v. Obrien,in this case the House of Lords held as
against the court of appeal, a wife who hasnt obtained independent legal advice any such
mortgage will be void but only as against the wife. This is the law, but you ask as a legal advisor
arent you giving legal independent advice?

Details of the proposed conveyance:parcel number, fixtures, consideration. As an advocate you

need to know the plot number, if the land only is being sold or there are fixtures.
Authorization to disclose details and information about related transactions: Cf. Mortgage
Express Ltd vs. Bowerman& Partners 1996 2 All E R 836. The authorization from the client
that you may disclose information related to the other members in the chain or the parties. There
is the duty of confidentiality and you need permission first. You need to ascertain and get formal
authorization. If the client denies this permission what should the advocate do? Breach the duty
of confidentiality or let go of the brief. Here you try and advise the clients of the repercussions in
that if the information isnt disclosed the transaction could take longer than expected. There is a
duty by the advocate to uphold the dignity of the client, because if you keep everything in
confidence most of the time the client would come back to you. If the property is charged to a 3 rd
party you ought to be in a position to disclose the amount the client is borrowing. In the case of
Mortgage Express Limited v. Bowerman& Partners 1996 2 All ER 836 it was held the advocate
doesnt just protect the client but also 3rd parties for the sake of earning fees. You shouldnt
encourage such fraud just to earn your fees.

Details on pre contract enquiries.Especially acting for seller. Here you are bound to receive pre
contract inquiries which are searches that inquire on the physical structure of the property. When
acting for the buyer at the initial interview you dont really tell your client to go and investigate
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but if its the seller you even have an evaluation report. Advocates must be equipped with all
these information so that you arent sued for negligence.
Discussion on conflict of interest: when acting for buyer/ seller it is a general principle of
professional conduct that an advocate must not act for two or more clients where there is a
conflict of interest between those clients. There is no specific bar against acting for a buyer and
seller provided there is no conflict of interest. The advocate must however not be involved in the
negotiation of the sale price of the property. It is also advisable to get the written consent of both
parties for an advocate acting for both the seller and the buyer. Acting for Lender and
Borrower: Acting for lender and borrower is generally permitted provided the chargee is an
institutional lender which provides charges on standard terms in the normal course of its
activities, e.g. a bank or building society. This in the vast majority of residential transactions, the
advocate for the borrower/purchaser will be the same as the advocate for the lender

The nature of the advise you offer the client must be independentt [ Cf. Barclays Bank PlcVs
Obrien 1994 All E R, Royal bank of Scotland VsEtridge 2001 4 All E R 449]
Discussions on fees.-All relevant client care information, together with information on fees to be
charged must be confirmed in writing at the start of the conveyancing transactions. Its possible
to agree on the advocates fees for the whole transaction. It is also important to inform the client
the right to increase the advocate's charges should the transaction prove to be unduly
complicated or protracted. In this way, the advocate does not bind themselves to a fixed
unalterable fee. It may be necessary to reassure the client by saying that in the vast majority of
cases, no increase is, necessary. An advocate must inform the client in writing the estimate of
fees and should also advise the client immediately in writing if the figure is to be revised.

Discussions on financing and financial implications of the transaction:advice on deposits,

stamp duty, undertakings
Details on the title documents:Obtain copies of the title document.

Reflection:...When men die at war it is usually because of lack of proper preparation...Sun Tzu
300B.C.How prepared isyou for your initial interview?

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What is the principle of Independent Legal Advise all about? Cf. purpose of transaction,
nature of documents as well as their terms and effect, giving client option of making the choice
and advise on liability premised on the documents

Of the Investigation of Title (and Property)

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.
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?].
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: see Oliver V Hinton 1899 2 Ch D
264, Section 3 of the Conveyancing Act 1881, Section 199 of the Law of Property Act 1925.
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. 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
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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.
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:

Land Registry (remember the location of the registries for the various registration
Acts)

Company Registry- where the property is/was owned by a company

Probate Registry-where transfer is by succession

Local Authority- to establish planning hindrances, notices, rates payment

Survey Department to establish boundaries.

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.

Court records- if there has been a dispute over the property.

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 searches, precontract inquiries and requisitions.

(a) Searches
Like registration, searches also shield against fraud. Searches are enquiries carried out usually
by the Purchasers or Chargees or Leassees 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.

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It is effectively the purposeful inspection of title records or register at the relevant (Lands)
Registry. 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 searches at
the Companies Registry to confirm existence of the Vendor or solvency of such Vendor, search
at the Local Authority Registry to ascertain any planning hindrances or notices search at the
Survey Department to reconfirm or identify boundaries.

With regard to the Lands Registry searches, the statutes recognize both official and unofficial or
hand (personal) searches. 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. 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.

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 defective search to qualify for indemnity. The
Official Search on the other hand has one great advantage that one is able to collect the
information required without discrimination.

In conducting a search one ought to get details of ownership, of special conditions, of the tenure,
of the rental, of the user, of encumbrances and quasi-encumbrances (i.e. caveats). Expect
however to meet such hiccups as missing registry deed or parcel files.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 title. The correspondence file is comprised of the internal
correspondence between the various sub-departments of the Lands Department. It may thus be
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ranked confidential and it is important that an official request is made to the Commissioner of
Lands.
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) and Skyview Properties Limited vs- Attorney General & 2
Others (NBI HCCC No. 1622 of 2001 unreported). The Court of Appeal however seems to
hold the contrary as in Pashito Holdings Limited &AnorVs Paul NderituNdungu& Others
[1997] eKLRthat one shouldnotinvestigate a title beyond the register at the lands registry. See
also Justice KimarusobiterinAttorney General Vs Kenya Commercial bank Limited ,
Afraha High School Limited & 2 Others [2004]eKLR 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 clients control as an officer of the court and law and thus the consequences of your
clients acts must be viewed by you in the larger probably publics 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?
NB: read- s.39 RDA and s.34 LRA

(b) Pre Contract Inquiries

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
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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. 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. 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: Gran Gelato Limited vs- Richcliff (Group) Ltd
[1992] 1 All ER 865. See also Cross Js holding in National Provincial Bank Ltd Vs Hastings
1965 AC 1175 that 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.

(c) Requisitions
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 description of
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theproperty, underpaid stamp duty, identity of the encumbrances if detected on the face of the
title.

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. 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.

Additional Notes
Why do searches?
The caveat emptor rule remains a cornerstone of conveyancing. It is prudent that a buyer will
need to find our as much as possible about the subject property before contracts arc exchanged.
The seller to some extent and under common law also has a duty to disclose any material
subsisting encumbrances. .A prudent buyer needs to discover as much as possible about the
property being purchased.
This is the obligation of the buyer's advocate. The buyers advocate must conduct pre-contact
searches and all preliminary enquiries. The advocate must carry out all appropriate searches and
enquiries before advising the buyer to sign any contracts to purchase property. Advocates must
bear in mind that if they fail to carry out every appropriate search, they will be liable in
negligence for any loss suffered by the client as a result of their negligent conveyancing. The
advocate must also advise the buyer of the need for a physical search or inspection of the subject
property prior to the exchange and the signing of any contracts. In Kenya, searches can be
divided into official and unofficial searches. In all searches, nominal fees are paid.
Personal searchesentail an actual examination of the deed files or register. A personal search
may be carried out by anyone. Normally advocates use their conveyancing clerks to do this. A
search will reveal details of all transactions registered against or in respect of the title.
Official searchesconstitute of an application to the registrar of lands to supply the person
applying with certified copies of details of the register (RLA). The registry by accepting to do so,
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takes responsibility of investigation of the title. Certified copies are admissible in court and conclusive of the entries in the register of deed file in the event of litigation.

The Significance of Searches

Searches may appear simple and routine, but they are vital for successful conveyancing.
An omission of a search could lead to unpleasant surprises. These include;
a) Discovering that documents lodged for registration cannot be registered because of
restrictive entries such as caveats, caution, prohibitions or restrictions on tide.
b) Discovering that the title is encumbered.(Charges)
c) The proposed vendor may turn out not to be the registered proprietor of the subject
property. The unpleasant surprises may turn out to be a matter of professional negligence
against the advocate. There is also the issue of embarrassment.
Other necessary searches include;
Investigations of the correspondence file to establish if Land Rents have been paid over the
years. Huge outstanding land rent arrears owing to the government by prospective vendor could
affect a sale/purchase transaction. An investigation of the status of payment of rates at local
municipal offices is also essential.

Physical Search or Inspection of the Property

A buyer should always be advised to inspect the subject property prior to exchange or signing of
contracts. The reasons for this are five fold;

Why check the state and condition of the property.

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.

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(ii) 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 buyers advocate will also raise written enquiries about
who is in occupation (e.g. tenants.)

(iii) 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.

(iv) 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
path ways and gates. Any easements adversely affecting the property should be referred to the
seller without delay for clarification.

(v) 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.

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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?]

EXECUTION & ATTESTATION

Execution is the signing of documents the purpose of which is to authenticate and acknowledge
the same. Signature on the other hand is the writing or otherwise affixing a persons name or a
mark to represent his name by himself or by his authority with the intention of authenticating a
document as being that of, or as binding on the person whose mark or name is so written or
affixed.

Initials, thumb prints (left thumb for men, right for women) are deemed to be

signatures but the mere typing of a name is not (See: Lord Denning in Goodman Vs J. Eban
1954 1QB 550, see also First Post Homes Ltd vs- Johnson [1995] 4 All. E. R. 355, Section
3(6) of the Law of Contract Act (Cap 23) Laws of Kenya). Section 44 of the LRA provide for
execution of documents.
Natural persons can sign by themselves or by their duly constituted Attorney(s). Companies
and other juristic persons will execute the document as per the provisions of their respective
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constitutions, memoranda, charter or the constituting statute as necessary. Such juristic persons
may also execute documents through their duly constituted Attorneys. A close perusal of these
constituting or establishing documents or statutes is thus important. Look at sections 43-48 of the
LRA.
Whilst the actual conveyancing instruments must be signed by the proprietor or his duly
constituted Attorney, a Sale Agreement may be signed by he who has apparent or ostensible
authority and not necessarily actual authority. [ Reflection: In the recent case of Shem
ObondiVsSeemford Holdings Limited, the Court of Appeal seems to have suggested that
apparent or ostensible authority has no place in modern day commerce. Do you
agree?]Documents will be signed at the signature block which appears at the very end of the
conveyancing document. It is however prudent that to achieve the aim of execution and also to
guard against unscrupulous practitioners, parties be encouraged to initial or sign every page of
the document.
Attestation is the proper witnessing of a signature or execution. It simply means to bear witness
to a fact. The person witnessing the execution must be present as the executant ascribes his mark.
The object is to help guard against fraud and thus a party to a deed cannot attest to its execution.
A Vendor ought not witness the Purchasers signature and vice versa. So seriously is the issue of
attestation taken that the Court of Appeal in LamchandFulchand Shah vs. - I & M Bank
Limited C. A. C.Appl. No. 165 of 2000 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. The conveyancer must thus take care and ensure the document has been
executed in his presence. [Reflection: who should attest the execution?]. A document executed
by a company does not necessarily require to be attested: see Coast Brick vsPremchandRaichand 1966 E. A. and Eccon Construction & Engineers vs- Giro
Commercial Bank [2003] 2. EA LR 426

VERIFICATION
Verification is explicitly provided for under section 45 of the Land Registration Act. It is
however more than just witnessing. A person executing an instrument is required to appear
before the Registrar, public officer or other person as is prescribed; and be accompanied by a
credible witness for the purpose of establishing identity, unless the person is known to the
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Registrar, public officer or other person. The Registrar, public officer or other person shall then
identify the person and ascertain whether the person freely and voluntarily executed the
instrument, and shall complete thereon a certificate to that effect.

POWER OF ATTORNEYS
This is an authority in writing by which one person (donor) enables another (attorney in fact or
donee) to act for him. Attorney is a person who is appointed by another and has authority to act
on behalf of another. The authority could be general or special (specific). It authorizes the donee
to do some lawful act for and in the stead of the donor. The authority is contained in a Letter
ofAttorney and could be irrevocable or revocable. Ordinarily it is irrevocable when there is
someinterest conveyed or granted to the decree. The donee can use the authority to do only what
he isauthorized under the Letter of Attorney to do and no more. Since the Land Registration Act
makes no form for a power of attorneys the RLA prescribes a mandatoryform to be used in
donating the authority which form must be executed and the executionverified
It is a general rule that an act done under a power of attorney must be done in the name of the
person who gives a power, and not in the attorney's name. The power may be general or specific.
The person appointing is known as the principal or donor. The person appointed is referred to
as the donee. A power of attorney presupposes that the person donating it has capacity. As such,
a person of unsound mind, for example, has no capacity to donate a power of attorney.
Consequently where a person purports that he has a power of attorney donated to him by a
person of unsound mind, as was the case in Grace WanjiruMunyinyi& another v
GedionWaweru& 5 others,7 the power is null in law.A power of attorney must be executed by
the Donor of the Power and thereafter stamped and registered in the Register of Powers of
Attorney. Stamp duty is payable by the donor/executor.8

Power of attorney may be revoked through the following ways:

a) By the donor executing a revocation
b) By performance of the act it was created to perform
c) Expiry of time
7
8

Civil Case No. 116 of 2002 (High Court at Nakuru, Kimaru J)

Section 46 of LRA

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d) Operation of the law e.g. when the principal becomes a bankrupt, his power of
attorney in relation to property or rights of which he was divested by the
bankruptcy, is revoked by operation of law.

The Execution of Powers of Attorney

Section 48 of the Land Registration Act No. 3 of 2012 makes provisions for powers of
attorney. Pursuant to this section, an instrument dealing with an interest in land shall not be
accepted for registration where it is signed by an agent (other than the registered proprietor)
without a power of attorney. The original of such power of attorney must be filed. In the event
that one wish to file a copy of the power of attorney then it must be with the consent of the
Registrar and the copy must duly be certified by him.
However, an instrument may still be registered when signed by an agent without a power of
attorney in certain circumstances. These are:
a) Under section 48(3) of the Land Registration Act, the guardian of a person
under a legal incapacity or, if there is no such guardian, a person appointed under
some written law is allowed to generally represent that person for purposes of the
Act without necessarily obtaining a power of attorney, by way of an application
for the same.

b) Under Cap 248 (Mental Treatment Act) one may apply to manage the property of
an insane person. Such a person need not have a power of attorney.
Sample forms on Powers of Attorney
The forms on power of attorney are to be found in the Government Lands Act (Cap 280), the
Registration of Titles Act (Cap 281), the Land Titles Act (Chapter 282), the Registered Land Act
(Cap. 300) which were all repealed by the Land Registration Act (LRA)

No. 3 of 2012.

However the LRA does not provide for the forms on powers of attorney. Resort is thus provided
for under section 108 of the LRA which provides that:

Until the Cabinet Secretary makes the regulations contemplated under section 110, any rules, or
other administrative acts made, given, issued or undertaken before the commencement of this
Act under any of the Acts of Parliament repealed by this Act or any other law, shall continue in
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force and shall be construed with the alterations, adaptations, qualifications and exceptions
necessary to bring them into conformity with this Act. Section 110 on the other hand empowers
the cabinet secretary to make the forms to be used in connection with the Act.
Pursuant to the provisions of section 108 the following forms may still be used:

SPECIAL POWER OF ATTORNEY

APPOINTMENT
I, MATUI DANIEL, of Post Office Box Number 441 Kapenguria in the Republic of Kenya do hereby appoint KENYA
COMMERCIAL BANK LIMITED of Post Office Box Number 69301 KITALE (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. 209/34 (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;

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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 local council or any other
administrative officers or before any other authority in all matters pertaining to or connected with the
Property and to sign and execute all certificates documents 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 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 thisday of June 2012
SIGNED and SEALED by me the

Said MATUI DANIEL

In the presence of: -

Advocate

DRAWN AND FILED BY:

GENERAL POWER OF ATTORNEY

POWER OF ATTORNEY
-TOPOGHISIO MATUI
I, MATUI DANIEL of Post Office Box Number 441 , Kapenguria, HEREBY APPOINT my son POGHISIO MATUI of
Post Office Box Number 441 , Kapenguria 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 my 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;

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g)

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;

h)

arbitration, suits, actions and other legal or equitable

proceedings in which my interests are concerned;

i)

employment, retention, suspension or dismissal of any and all employees in my employ;

j)

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;

k)

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 2012
SIGNED and SEALED by me the said )
MATUI DANIEL

In the presence of : Advocate

DRAWN AND FILED BY:

KATINA & CO. ADVOCATES
ADVOCATES
WOYET PLAZA, 4TH FLOOR,
LOTODO LANE, MAKUTANO,
P.O. BOX 551-30600,
KAPENGURIA

STAMP DUTY
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?].

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Failure to pay duty is equivalent to evasion of tax and is a criminal offence under Section 113 of
the Act. Section 46 of the LRA supplements the Stamp Duty Act and under the Section no
document is acceptable for registration if the stamp duty required to be paid has not been duly
paid and documents properly stamped [Reflection: what is proper stamping: revenue stamps, or
franking].

Duty on conveyancing instrument is paid on the ad valorem value at the statutory

rate. The rates currently are : Transfers 4% for properties situate within cities municipalities
and 2% of the value for properties outside municipalities/cities; charges and Mortgages 0.1%
of the amount secured; Discharges/Reconveyances -0.05% of the amount secured and Leases 1%
of the annual rent for a Lease of less than 3 years and 2% of the averaged rent for a Lease of 3
years or more. Long term Leases or subleases are deemed to be Transfers and fetch duty as if
they were Transfers.

Currently, stamp duty fees is collected directly by the Kenya Revenue Authority by payment
being made to the Authoritys account in commercial banks.

The document together with the

stamp duty assessment form and the banking pay-in slip is then delivered for stamping by the
Collector of Stamp Duty.

The Collector has powers to adjudicate and decide whether a

document should fetch duty [Reflection: How wide is the Collector of Stamp Dutys discretion
under Section 17 of the Stamp Duty Act? Contrast and compare this Section with Sections 96/97
of the same Act].

Exemption from payment of duty is however the recluse of the Minister of Finance after
receiving the appropriate recommendation from the Minister of Lands [see Section 106]. Relief
and or exemption will be granted to charitable organizations as well as religious organizations or
institutions. Certain institutions are also duty-exempt. These include educational institutions,
government departments (e.g. Central Bank of Kenya) and the Export Processing Zone
Companies. [Reflection: what possible reforms would you recommend to the Stamp Duty
regime? E-stamping, first-time home owners be duty exempt, beneficiaries of deceased estates
to pay file duty, base duty on the theory of from each according to his means.]
It is important that in a conveyancers brief; the Stamp Duty Assessment Form obtained from the
Collector of Stamp Duty is completed in a legible manner, the payment is re-checked to have
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been fully made to match the amount assessed, all receipts are available copied and properly
filed and any certificates for purposes of relief or exemption required are obtained in time.
Process:

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 of Stamp duty

Collector of Stamp Duty reconciles records and stamps document by franking

Audited by Government accountant and dispatched

RATES & RENT CLEARANCE CERTIFICATES

Rates are levies payable to the Government through the local authorities under the Rating Act
(Cap 267) Laws of Kenya. It is simply a form of taxation and conveyancing helps in a way
towards its collection.

Upon full payment of rates due on any parcel of land, the local

authoritys Clerk issues the owner of the parcel with a Rates Clearance Certificate. It is prima
facie evidence that the rates due and any interest accrued thereon have been fully paid. Sections
38 of LRA require that prior to the Registrar accepting any document intended to transfer or vest
any interest in land for registration there must be also produced a valid Certificate or Statement
showing that the rates have been cleared or paid up. Rates will be levied on all parcels of land,
freehold or leaseholds.

Land Rent, too, is a source of income for the Government as Landlord. Land Rent will be levied
only on leasehold parcels where the annual rent has been reserved at the time of the Grant being
issued.

[Reflection:

what is a peppercorn?]

Section 39 of the LRA helps to assist the

Government in collection of rent as both Sections require that before any transaction on a
leasehold property is registered the parties must produce to the Land Registrar a valid Rent
Clearance Certificate. It is always the duty of the registered proprietor to pay and obtain the
Rates and or Rent Clearance Certificate, unless agreed otherwise. [Reflection: What is the
process of obtaining either a Rent Clearance Certificate or a Land Rates Clearance Certificate?
What are the challenges met by ordinary practitioners?]
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RATES CLEARANCE CERTIFICATE

This is issued by the appropriate local authority in whose area the land is situated. It certifies that
all monies payable to the local authority in respect of that property have been paid. Such monies
include:
i)

Land rates

ii)

Interest charges on rates and

iii)

Unpaid water bills.

It is necessary to obtain a Rates Clearance Certificate before a transfer is presented for

registration: S.86 RLA; S.33 RT A. Both state that the Registrar shall not register a transfer
unless a Rates Clearance Certificate is produced to him where necessary.

LAND RENT CLEARANCE CERTIFICATE

All leaseholds from the Government are subject to an annual rent that is payable by the grantee
of the lease. Before registering a transaction involving leasehold land, the grantee must show that
all land rent has been paid to the Government. E.g. Before registering a transfer (of a leasehold
interest), the vendor must obtain a Land Rent Clearance Certificate which is a document
certifying that all land rent due has been paid. S.86A RLA - provides that the Registrar shall not
register a transfer unless a Land Rent Clearance Certificate is produced to him where necessary.
(Note: No LRCC is necessary where land is freehold)
Examples of other transactions where a LRCC is required for leasehold land: Lease, Charge.

CONSENTS
There are quite a number of consents in conveyancing to ensure the success of the transaction.
Different transactions however require different consents and occasionally some will over-lap.
Reflection: what is the rationalebehind the various consent?

1. Consent from the County Land Management Board

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 (section
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39(2) of the LRA). This includes paying all outstanding land rent. It will be applicable only to
leasehold properties and not freeholds. .
2.

Land Control Board Consent

This applies to all land designated as agricultural land under Section 2 of the Land Control Act
(Cap 302) Laws of Kenya [Reflection: what is agricultural land?] and is required for all
transactions touching on and concerning such land. The particular transactions are outlined in
Section 6 of the Land Control Act. The consent is granted by the local Land Control Board on
application by both parties to the transaction. The application is made in a prescribed form and
consent also issued in a prescribed form.

User of both forms is mandatory. Transactions

touching on and concerning agricultural land will be exempt from the Land Control Board
Consent if the President so directs or if it is a transmission or if the Government is a party. The
application to the Board must be made within six (6) months from the date of the transaction
otherwise the transaction is null and void: Simiyu vs- Watambamala 1985 KLR 252, Karuri
vs- Gituru 1981 KLR 247, Jacob Minjire vs- AFC, Njamunyu vs- Nyaga 1983 KLR 282.
A case in point is Nelson Githinji et al vs. MuneneIrangi9 where the court of appeal
categorically stated that the effect of section 6(1) of the Act was to render null and void any
transaction, sale, transfer or other disposition or dealing in agricultural land situate in a land
control area without a Land Board Consent.

Facts
The suit land was agricultural land, but the consent of the Land Board was not obtained. There
was supposedly an arbitration, which recommended that the superior court should order the
appellant to transfer the suit land to the respondent without delay. On appeal;

Held
The transaction for which the respondent sought specific performance required the consent of
the relevant Land Control Board. This was a legal requirement. The effect of the arbitrators
award was to grant the respondent the specific performance he sought. If no consent of the
relevant Land Control Board was obtained, then that award was illegal.

Civil Appeal No. 133 of 1987 at Nyeri

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Jacob Minjire vs- Agriculture Finance Corporation

AFC, exercising chargees power of sale sold land to the appellant in a public auction. The
buyer paid the purchase price but AFC failed to transfer the land. Meanwhile, the original
owner of the land (the chargor) redeemed the land. Consent of the Land Control Board had not
been obtained in respect of the auction sale.
Held:
1. Consent of the Land Control Board is by statute, made a term of the contract, noncompliance of which vitiates the contract.
2. Where a controlled transaction becomes void for lack of consent of the Land Board, the
Act gives an innocent party a special cause of action, which gives him a remedy
independent of the void transaction.
3. Consent has to be applied for within three months from the date of agreement.
4. Neither special nor general damages are recoverable in respect of a transaction that is
void for want of consent.

3.

Other consents include:

Consent of the Railways Corporation (for land adjacent/adjoining railway lines),Consent of

Kenya Airports Authority (for land adjacent/adjoining the airports or flight paths), consent of
chargee (see Section 59 of the LRA), Consent of Lessor/Landlord section 55 &56 of the
LRA.[Reflection: Whose responsibility is it to obtain the requisite consent? Which consent(s)
may you require to transfer a free hold property? And an Apartment under a Sub-Lease? What
are the consequences of not obtaining a requisite consent or clearance certificate?]Unless
otherwise agreed it is the responsibility of the person who intends to dispose of the interest to
obtain the consent.
The Consent of the Kenya Railways
For any land adjacent to or adjoining the Railway land, the consent of the Railways Corporation
is required prior to any dealing in that land. Cap 397 Kenya Railways Corporation Act does not
provide for the above requirement.

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Most of the time when one applies for this consent, one is required to pay cess to the Corporation
before being granted the consent. The Deed Plan to most properties reveal a Railway Line
running through some parcels of land. This consent would be in addition to the LCB consent if
applicable.
The Consent of the Kenya Airports Authority
This consent is issued by airport owners for all properties which may be adjoining flight paths.
The whole purpose of this is for the authority to find out what one wants to do with the property.
One is given a questionnaire to fill in. One must consult before doing anything on the land.
The Consent of the Landlord [Lessors Consent]
This refers to one who has obtained leasehold from Government (head lessor) and wants to sub
lease it. This is found in sub-leases. One will need the consent of the Landlord. Aimed at
ensuring agreements in the lease are honoured as well as all rent being paid.
The Consent of Trustees of National Parks
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.

1. 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
2. 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.
3. 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: 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.

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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 GichukiMinjire 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.
Held: No specific performance would be granted because:
a) Property had already been redeemed. Equity could not act in vain
b) No LCB consent was obtained
Bosire J said:
The lack of statutory consent at the expirty 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
DISPOSITION IN LAND
Generally disposition is a transfer of an interest in land.
STAGES IN DISPOSITION
Having discussed the subject of disposition it is important to note that dispositions usually
happens in two stages
First- contract for sale
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 Conveyance
The latter stage is where the transfer of an interest in land takes place.S 54 of the repealed ITPA
and S3 RLA do not consider a contract for sale of land as transferring interest in land. Why is it
important therefore?
WHY CONTRACT?

It deals fully with the matters that must be dealt with between the date of the contract and
completion;crystallizes the position of the parties;

It binds the parties to the sale, prevents last minute withdrawal by either party and
facilitates completion;

Parties may use it to confer special advantage on themselves;

It may be used to transfer the legal interest on chattels so as to reduce the duty payable at
the completion stage;

It provides for the resolution of any disputes that may arise between the date of the
contract and completion;

It provides remedies for breach;

It gives the purchaser time to investigate the title;

The equitable doctrine of conversion is applicable to these kinds of contracts;

It makes the transaction enforceable-S. 3(3) of the Law of Contract Act.;

What is the difference between agreement to sell land and a contract for sale of land?

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.
3 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.

INGREDIENTS OF A VALID CONTRACT

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There must be a final, complete, written contract on at least the essential terms:
Offer
Acceptance
Consideration
Capacity
Intention to create a legal relationship
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

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

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:
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 No suit shall be brought upon a contract for the disposition of an interest in land
unless:
The contract upon which the suit is founded
i.

Is in writing

ii.

Is signed by all the parties thereto

The signature of each party signing has been attested by a witness who is present
when the contract was signed by such party.........
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?

JUDICIAL INTERPRETATION OF S3 (3)

Prior to the amendment of 2003
1. 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
2. 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 defendants handwriting, satisfied the requirement of S3(3) of LCA
Post 2003 amendment
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

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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- 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.
To deprive a party to a contract of his right to bring an action upon it is to deprive him of one of
his most 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

TERMS
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.
TERMS IMPIED BY STATUTE, S.55 OF THE REPEALED ITPA
Vendor is bound

Buyer is bound

To disclose to the buyer material latent

To disclose to the seller info which

defects in the property

increases the value of the property

To

produce

upon

request

title

Pay purchase price on completion

documents
Answer to the best of his information

If sold free of encumbrances, retain

all relevant questions from the buyer

part of purchase price to cover

encumbrances

On payment of the purchase price,

When property has passed to him

execute a conveyance

bear losses on the property not

caused by seller

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Between the date of the contract of sale

Where property has passed to him,

and delivery of the property take care

pay all public charges, rent etc

of

the

property

documents(Dharmshi

and
V

title
Abdul

Reikhman (1950) 204 KLR

To give possession of the property
when required
Pay public charges and rent
Other terms are found in S 46-48 of Sectional Properties Act- for sale of sectional
properties.Remember the terms must be certain
Read Michira vs. Gesima Paper Mills Ltd (2004) EA 168
The entire agreement was held to be void for uncertainty

SALE AGREEMENTS
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:
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offer and acceptance

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intention to be bound

consideration exchanging hands

the contract is certain

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.
Question then is: Why do we draft and title the 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?[
cf. Lord Diplocks reference to bisynallagmatic associations as distinguished 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: Derry vs. Peek, Shaw vs. Forster)?
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.

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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). Sections 54 and 55 of the repealed ITPA also had certain implied terms
which in the absence of contrary agreements applied to open contracts. 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 orituractiowillbe 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?]
In general an ordinary Sale Agreement will contain five parts namely: the parties, particulars of
sale, special conditions, general conditions and execution.

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
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
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purchasers 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.
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 possession would be given. The agreement was uncertain and specific
performance could not issue.
NOTE: Why didnt the court get rid of the uncertain provisions? It did not have a saving clause
in case of inconsistency

CONTENTS OF A SALE AGREEMENT

1. Parties
2. Particulars of Sale
3. The General Conditions
4. The Special Conditions
5. Execution

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]

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. Avoid
allowing the clause sold subject to all encumbrances

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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
-

where the contract price includes the value of the fixtures and fittings sold separately

where the fact is that the property is sold subject to a mortgage

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.

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 Vendors Advocate (see Salim vsOkongo, 1976 KLR 42, LSK Condition 24).
Note: Fixtures and fittings Case Law-

Joe Kadendi Wachosi

Melluish vs- BMI (No. 3) Ltd 1996 AC 456

Ellitestone vs- Morris 1997 1 WLR 687

Leigh vs- Taylor 1902 AC 157

Wake Vs Hall (1882 ) 8 App Cases 195

Page 63

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 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.

Deposits

LSK Condition 3

Stakeholders & Agents as Holders

Universal Corporation vs- Five Ways Properties

1997 1 All ER 254 (on return)

Workers Trust vs- Dojap Investments 1993 2 All

ER 370
(as to forfeiture of more than the customary 10%
deposit in the event of default by the Purchaser and
the need to liquidate the damages)

Deposits are not only part of the purchase price but are also earnests or guarantees on the
part of the Purchaser to complete the transaction. They entitle the Purchaser to a lien
over the land once paid. Note too the fact of the courts being extremely jurisdictional in a
purely contractual situation [should not a deposit constitute only a genuine pre-estimate
of damage and no more? How can we reform it?]

Completion

LSK Conditions 2 & 4

Barclay vs- Messenger 1989 3 All ER 492(time of the essence)

Notice to complete

Efficacy & Validity: must be explicit and leave no

doubt that giver will rescind agreement if notice is
not honoured. Giver must be ready able and willing
to complete.
-

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LSK Condition 28
Page 64

Completion time

Duty of Vendor: to deliver

(i)

Vacant possession and

(ii)

Completion documents.

What is vacant possession? Property must be:

- Free from physical impediment
- Free from any form of occupation
-

Duty of Purchaser:

to inspect completion

documents,
authorize release of deposit and deliver balance of
purchase price.

[Reflection: What are the dangers of electronic drafting and negotiation of contracts?]
See also Hand outs

Steps commonly taken by Buyers Advocate

-

Steps commonly taken by Vendors Advocate

Checklists

acting for Vendor

- acting to Purchaser

Model Sale Agreement Clauses (for class discussion)

Deposits & Completion

J. M. Kibuchi on LSK Conditions of Sale

MODEL SALE AGREEMENTS

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

Definitions and Interpretations

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

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Incorporation of LSK Conditions for Sale

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. NOTE there is a need to amend the
LSK conditions especially in light of new developments.

Agreement for Sale and interest sold

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

Special conditions
Sui generis clauses
Variation of general conditions

Capacity
Legal competence for a person to sell e.g. if selling as an attorney, administrator, agent,
beneficial owner

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.

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 vendors 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.
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Assignment Clause
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.

Default Clause
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.

Non merger Clause

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.

Stamp Duty and other 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 purchasers 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.

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
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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)

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.

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.

Miscellaneous clauses and provisions

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.

Execution
This is the affixation of ones 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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SALE AND PURCHASE OF LAND

STEPS COMMONLY TO BE TAKEN BY SELLERS 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.

2.

Check conflict of interest issue.

Discuss fees, disbursements, taxation matters and confirm instructions.

Check and confirm that proceeds will clear any encumbrances.

Draft initial letters

To agents, to client, to Buyers Advocate etc.

3.

Obtain Title Deeds 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 Buyers Lawyer with copy to Seller for approval.
Send also to Buyers 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 consult with Seller before engrossing.

Joe Kadendi Wachosi

Page 69

7.

Return Contract to Buyer for execution or signature.1

8.

Receipt 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 Buyers 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.
2
STEPS COMMONLY TO BE TAKEN BY BUYERS ADVOCATE
1.

Take instructions from Buyer.

2.

Consider conflict of interest.

Joe Kadendi Wachosi

Page 70

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 Valuers Report.

8.

Deal with planning matters.

9.

Make pre-contract searches and enquiries.

10.

Consider the draft Contract and raise pre contract enquires of the Seller.

11.

Investigate Title and raise requisitions.

12.

Consider Sellers 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 Sellers
Advocate.

18.

Receive counterpart Contract signed by Seller.

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.

Joe Kadendi Wachosi

Page 71

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.

Joe Kadendi Wachosi

Page 72

MAYENDE CONVEYANCING

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?

...
Obtained

Pending

..

1. Obtain copy title deeds

..

.....
2. Search the title

..

..

..

..

.
3. Is Land Control consent required?
.
(To be obtained by vendor)
4. Is Commissioner of lands consent
required? (vendor to obtain)

Comment

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MAYENDE CONVEYANCING

5. Is any other form of consent

required? (vendor to obtain)

.
6. Does client have deposit?

.
7. Is vacant possession going to
be granted on completion? If
earlier, on what conditions?

..

.
8. Are there any tenancies?

.
9. Is the Transfer document prepared? .

.
10. Joint tenants or tenants in common?

.
11. Have we collected Stamp Duty
and fees from client?

.
12. Have all completion documents
been received? Rates Certificate?

..

.
13.

Has stamp duty been paid?

..

..

...

.
14. Has a valuation been carried out
by Government Valuer?
.
15. Has document been endorsed by
the Collector?

..

.
16. Are there any new encumbrances

..

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MAYENDE CONVEYANCING

..

On title?(Do a further search)

.
..

17. Is registration complete?

.
18. Has clients title been
..

entered on the register?

.
(Do a further search)
19. Has the completion statement and
and fee note been prepared?

SALE AND PURCHASE OF LAND

CHECKLIST ACTING FOR VENDOR

Obtained

Pending

Comment

Tick or Cross where appropriate

1.

Obtain title deeds

..

2.

Investigate the title

3.

Is vacant possession going to

be granted on completion?

4.

Are there any tenancies?

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MAYENDE CONVEYANCING

5.

Has Purchaser paid deposit?

6.

Prepare Agreement for Sale ..

7.

Is Land Control consent

required?

..

8.

Is Commissioner of Lands
consent required?

..

9.

Is any other form of

Consent required?

..

10.

Does notice to vacate to

occupants of property need to
be served?

..

11.

Has Rates Clearance Certificate

been obtained?

..

12.

Has Stamp Duty Valuation

Form been prepared?

13.

Has draft Transfer been

received?

..

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MAYENDE CONVEYANCING

14.

Has Transfer been received? ..

15.

Undertaking required?

16.

Has registration been

..

completed?

17.

Received counterpart copy

of duly registered transfer?

..

18.

Has the completion statement

and fee note been prepared? .

PROFESSIONAL UNDERTAKINGS
Common practice in banking and conveyancing transactions
What is a PU?- Encyclopaedia of Forms and precedents any unequivocal declaration of
intention addressed to someone who reasonably places reliance on it and made by...a solicitor in
the course of his practice, either personally or by a member of his staff under which the solicitor
becomes personally bound
Ingredients:

Unequivocal declaration of intention by an advocate

Addressed to someone

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MAYENDE CONVEYANCING

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?
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

Vendors Advocates undertaking not to release the purchase price to Vendor pending
actual registration of the Transfer.

Purchasers Advocate undertaking to hold completion documents to Vendors order

pending payment of the purchase price.

Mortgagees Advocate undertaking to advance the loan upon registration of the Charge
plus/or transfer simultaneously.

Mortgagors Advocate undertaking to pay the redemption amounts upon registration of

the discharge.

BRIDGING OF COMPETING INTERESTS

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MAYENDE CONVEYANCING

PUs involve arrangements for 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 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 statements like an
undertaking will be given as to how outstanding mortgages will be dealt 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 no
law bars oral undertakings. The giver and recipient dont have to be in an advocate/client
relationship

(See

Bridge

up

Containers

Services

vs.

GichanaBwomwando

t/a

GichanaBwomwando& Co. Advocates, Misc. Civ. App. 386 of 2006).

Law Society of Kenya Digest of Professional Conduct and Etiquette 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

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MAYENDE CONVEYANCING

Naphtali Radier vs. D Njogu& Co. Advs - An advocate is obliged by law as an officer of the
Court to honour his professional undertaking. Failure to honour= professional misconduct. In the
UK- Advocates cannot give uninsured undertakings. In Kenya advocates are faced with the
dilemma of losing a client (e.g. banks) or issue a non funded PU.

IS IT A CONTRACT?
It places both a legal and ethical obligation on the giver. In Peter NgangaMuiruri 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 MugukuMuriu& Co. Advocates (Civil Appeal No.
48 of 1994)

See Kimaru Js ruling in Pyrethrum Processing Co. Ltd vs. Rogers Shako Adv. HCC
148 of 2004- an undertaking is a form of trusteeship

See Onyancha Js 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. NjagiWaweru& Co. Adv. HCC No. 209 of 2008- Justice
Njagi refused the Advocates arguments that he was entitled to a lien over the funds.

TYPES

The granting advocate is able to personally fulfil the stated obligations e.g. ...to hold the
documents to your order returnable on demand.....

The granting advocates promise can only be fulfilled by the lawyers client (see the case
of HaritSheth t/a HaritSheth Advocates vs. K.H.Osmond t/a Osmond Advocates Civil
Appeal No. 276 of 2001 CA NBI)

ENFORCEMENT OF PUS

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MAYENDE CONVEYANCING

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

MuigaiAdv (HCC757 of 2003)

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.

PRINCIPLES
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 Advocates staff whereby the Advocate (or in the case a
member of his staff, his employer) becomes personally bound.
1.1. 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.
1.2. 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.
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.
1.3. Undertakings can be given even to lay persons. (See KCB Limited vs. Adala 1983
KLR 467)

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MAYENDE CONVEYANCING

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

implementation as a matter of conduct.

2.1The 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.
2.2.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.
2.3. 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.
3.1The Society will normally require compliance with an undertaking only at the instance
of a recipient.
3.2. 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
OtienoVs AGN Kamau& Co 134/03
3.3. The court will however not hesitate to enforce an undertaking on an application by
the recipients client. See: NaphtallyRadier vs. David Njogu t/a D. Njogu& Co.
Advocates HCCC No. 582 of 2003 (Nrb), Kenya Commercial Bank Limited vs.
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 recipients client takes
the benefit of the same and can enforce the same.

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

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

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MAYENDE CONVEYANCING

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

5.1. 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 Advocates
control.
6.1. 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 Advocates control

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

Advocates staff, whether admitted to the Roll of Advocates or not.
7.1. Where an assistant gives an undertaking, the conduct of the assistant may also be
called into question by the Society.

8. Where an Advocate in partnership gives an undertaking as an Advocate in the course of

practice, all partners are responsible for its performance.
8.1. A partner remains responsible for the firms 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.
9.1.

Since an Advocate will be personally bound to honour his undertakings, it is

essential for the Advocates protection that the clients 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.

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.

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MAYENDE CONVEYANCING

11. In addition to the Societys 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.
11.1Where 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 clients business.

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.
13.01 Self explanatory.
13.02 Illegal undertakings intended for example to perpetrate a fraud should not be
sought or given.

ADDITIONAL NOTES
What is a completion notice?
The vendor has to ensure registration of the documents of conveyancing (even though the prime
obligation rests upon the purchaser) because it is only after registration that he can get paid.
Therefore he must follow the process through to ensure he is paid on time.
N.B Completion doesnt include/involve registration
What are land rates? What law empowers the municipal authority to charge land rates?

Local Government Act

Rating Act

Land rent-payable to the Government

Land Rates-payable to Municipal Authority

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MAYENDE CONVEYANCING

What is apportionment? This is the process of apportioning the rates and rent payable in case
property is sold midway through a particular year. So for example if rent charges or rate charges
were Kshs 1000 for every year, then if the property is sold midway through that year then rent/
rates due will be Kshs 600. This is the process referred to as apportionment.

Interest chargeable on late payments accrues from the date of completion. Such interest should
not be punitive i.e. it should not be higher than the interest recommended by the Central Bank of
Kenya as the base lending rate.

Exam Focus: List 5 or 6 Completion documents. These should be prioritized in the following
order

Original Title Documents

Clearance Certificates-These should also include:

demand notes from the local municipal

authority for payment of land rates, bank cheques showing that you have actually paid monies
due, receipts evidencing payment of rates/rent.
Consents
Transfer Documents (In Triplicate)

Requisitions are enquiries raised by the purchaser after a Search.

Exam Focus: List down and explain 3 conditions found in a contract of sale agreement.

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

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MAYENDE CONVEYANCING

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 Vendors
Advocate you should not take 10% otherwise liability for any losses on your client may befall
you.
Payment is ordinarily made to the Vendors 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 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 that the
cheque is cleared upon presentment.

NATURE
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

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MAYENDE CONVEYANCING

capriciously change his mind. It sort of guarantees performance. It thus helps in assuring all that
its forfeiture in the event of a default is not a penalty but rather an agreed loss.
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. A deposit also counts as part of the
purchase price on completion. The Purchasers advocate is at completion expected to formally
authorize the release of the deposit to the Vendor. 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
Advocate always holds the same as a stakeholder.

The agreement can however provide that

you hold as agent for the Vendor.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 Stakeholders 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

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MAYENDE CONVEYANCING

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 Vendors.
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 installments 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%.

IMPORTANCE OF DEPOSITS
1. Deposit acts a security for completion, fear of forfeiture makes the purchaser complete
2. Reduces the purchasers burden of paying the full purchase price at a go. It is part of
purchase price and the purchasers advocate is expected to authorize its release to the vendor
on completion.
3. Gives the purchaser the right over a lien on the property enforceable in Court.
4. Creates a symbiotic relationship with the vendor

HOW IS DEPOSIT HELD?

Under condition 3- it is held by advocate or estate agent as stakeholder or as agent

As stakeholder-held in trust to the order of both parties. The ultimate goal is to have it
released to the vendor upon completion r when forfeited in case of breach by purchaser,
return to the purchaser if the vendor defaults

As agent the money is held to the order of the vendor, to be released upon his demand,
the funds are used to the vendors benefit to clear outgoings etc.

Care must be taken in handling clients money- consider which bank to deposit it in. It is
deposited in the client account unless agreement states otherwise.

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MAYENDE CONVEYANCING

Since both parties have no proprietary right over the deposit held as stakeholder, the
interest earned can be for the stakeholder

[Reflection: what reforms would you propose to the issue of Deposits in sale transactions if
any?]

LAND REGISTRATION ACT

Definitions S 2
o Dealing-disposition & transmission
o Legal incapacity- unsound mind or under 18 years
o Disposition-sale, charge, transfer, grant, partition, exchange etc. It also means the
agreement to undertake the disposition
o Transfer-the passing of land from one party to another and not by operation of law. It also
means the instrument by which such passing is effected
o S34 Searches- one can obtain official search and certified copies of any document
o S36(a)- allows contracts by correspondence, compare this with S38 of Land Act(contracts
have to be in writing, signed by all parties and signature witnessed). Is there a
contradiction?
o S36 (3)(b)- allows for LSK Conditions of Sale
o S38(1) no registration without a statement that rates for the last 12 months have been paid
if property is within a rating authority
o S39 (1)-no registration without payment of rent.
o S39(2)- No registration without consents
o S42- No part transfers. One has to subdivide first
o S43- every instrument has to be in the prescribed form and be registered, this excludes
contracts
o S44-execution of instruments- by all parties, if by a body corporate, association of cooperative society it should be executed in the presence of an advocate, magistrate, notary
public or judge. Also provides for execution of documents outside the country.
o S45-Verification and attestation
o S46-stamping

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MAYENDE CONVEYANCING

o S47 & 48- capacity- minors(registration through a guardian) Agents(through power of

attorney) and persons with disability(through guardians)

OTHER FORMS OF DISPOSITION OF PROPERTY

Other than conventional contracts

1. AUCTIONS
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:

Execution of a court order

Pursuant to a statutory power of sale.

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 doesnt 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
doesnt meet the reserve price. If no bid meets the reserve price the auction will be withdrawn.

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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?

chargee and their agents

Owner of the property

Any person desirous of owning the property.

DUTIES OF ADVOCATE FOR PROSPECTIVE PURCHASER IN AUCTION SALE

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.

Conduct enquiries whether there are any pending matters in court.

Engage surveyor to advise you on a property (advice client on need for this).

Advise client that he is supposed to pay 30 to 40 percent at the fall of the hammer.

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%

Engage valuer- to advice on proper/real value of property.

DUTIES OF ADVOCATE FOR SELLER IN AUCTION SALE

Act in good faith; ensure property fetches the best price.

Ensure proper procedures are followed once bid is accepted.

After receiving 30-40% ensure that the appropriate documents are put in order.

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.

Considerations to note:
See Auctioneers Act

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Auctioneers must be licensed by the Auctioneers board to conduct an auction sale.

The auctioneer must hold a valid practicing certificate.

The place, date and time of auction must be advertised in the local newspaper.

The sale must take place as advertised unless cancelled by notice.

The presence of a reserve price, if any, must be indicated in the advert.

If theres 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.

The three landmark stages of a conveyancing transaction are:

Making of the Contract

Completion

Registration

PROS AND CONS OF AUCTIONS

Bad root of title can be disposed of

Involves many interested parties- since sale is publicized

Costs- auctioneers, advertising etc

Purchaser has little time to consider terms in contract for sale and impose his conditions

Price may not reflect the market value

Prone to challenges by chargor/mortgagor

2. PURCHASE OF NEW HOMES

For houses, flats and apartments

Letter of offer(prepared by vendors lawyer)

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

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Ensure compliance with completion date

Defects liability- period is 6 months after completion, repair of any damage is at
vendors/developers 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
Share transfer from should be executed
Ensure there is a warranty and indemnities clause to rely on.

HOMES: DUTIES OF ADVOCATES

Purchaser 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

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 movements 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 clients development plan has
been approved

If purchasing commercial premises look out for protected tenants, get vacant possession
if possible.

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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.

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
conditions of the lease

SECTIONAL PROPERTIES ACT

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:

Escalating value of land

Diminishing stock of land

Increasing cost of building materials

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.

Shortcomings

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Content and form of plans to support issue of titles was not prescribed in legislation.

No law that described what was individual property and what was common property and
this was left to the wording of the transfer.

Incorporation of a management company for the administration of the common services

was not mandatory.

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.

Issuing titles to the flats led to a multiplicity of titles to the same land

SECTIONAL PROPERTIES ACT, NO 21OF 1987

PURPOSE:

Division of buildings into units owned by individual proprietors

Common property to be owned by unit owners as tenants in common

Use and management of units and common properties

The Act provides for:

Requirements for sectional plans intended to support unit titles

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.

Register for title in common property is closed

Substantive law governing the rights of the parties

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.

Corporation has a management board which appoints a manager to manage the common
property.

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.

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WHAT NEXT AFTER THE REPEAL OF THE RLA?

The LRA S 54 (3) recognises registration of interest in land under the SPA.

LRA S 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 georeferenced and approved by the body charged with survey.

PURCHASE AGREEMENT
S 46 imposes duty on developer to deliver the following documents before selling or agreeing to
sell:

Sale agreement

By-laws or proposed by-laws

Management agreement or proposed management agreement

Recreational agreement or proposed recreational agreement

Lease of property/title, certificate of sectional property

Any charge that affects the property

Sectional plan or proposed sectional plan

AGREEMENT FOR SALE CONTENTS

Format S 47:
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
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:

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the interior finishing of all major improvements to the common property located
within a building

recreational facilities, equipment and other amenities to be used by the unit owner

location of roadways, walkway, fences, parking areas and recreational facilities

landscaping

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.

Points of Reflection
Do you need the management company for units held on freehold tenure?
Does the corporation incorporated under the SPA have legal force?
What if unit owners are more than 50 and you would wish to incorporate under the Companies
Act?

COMPLETION AND TRANSFER

Completion is the process in a conveyancing transaction where necessary documents of title are
handed over in exchange for the price.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). S.54 of the ITPA and s.3 of the
RLA recognise that the Sale agreement is merely executory.
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

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of conveyancing. It is however bilateral, concessional and concurrent. Key phrases on

completion are:
1. The date of completion
2. The venue of completion
3. The deliverables (completion documents)
4. The obligations of either parties at completion

The sale agreement is an executory document and interest in the land has to be formally
transferred by stamping and registering a transfer or conveyance. Prior to registration, the vendor
expects to be paid consideration, while the purchaser expects to be given all the registrable
documents. The process of exchange of consideration is called completion. Prior to completion,
the purchasers advocate will have prepared a transfer/conveyance document. In order to do this
it is important that he identifies the document to be drawn based on the statute in which the
property is registered.Transfer is drawn by the Purchasers advocate and forwarded to the
Vendor for approval. The Transfer causes the disposition once registered.The form taken by a
transfer or conveyance deed depends on:
o Statute under which the property is registered
o The interest being conveyed or transferred

Statute

Document of title

Transfer document

GLA

Title Deed

Conveyance,

Re-conveyance

(upon

redemption of mortgage), Assent (transfer

upon death of proprietor), Assignment or
Reassignment (for leases). No prescribed
forms, the practice has been to use
documents prescribed under the 1845 Real
Property Act and the 1881 Conveyancing
Act both applicable in Kenya as statutes of
general application before 1897

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LTA

Grant or Certificate of

Transfer

Title
RTA

Grant or Certificate of

Transfer in prescribed form. One may amend

Title

without substantive departure from the

prescribed form.

RLA

Land

Transfer of Lease/Land or transmission in

Certificate/Certificate of

prescribed form or get consent of registrar

Lease or Title Deed

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.

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

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completion period where no date is provided. If its a Controlled land then completion is 42 days
after Vendors 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.

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. Thus in:
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 Jesse 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.
In the Kenyan case of SagooVsDourado 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

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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

NjamunyuVsNyaga 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.
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 heeded then one is entitled to rescind as the Notice itself now imposes
the time is of the essence condition. 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?]

FAILURE TO COMPLETE

Either the vendor or purchaser may fail to complete (i.e. on the completion date). Time
should be of the essence.

Remedies

If offended party is vendor, he can go for specific performance thus

precluded from forfeiting the deposit. He can also seek damages (usually
calculated as the difference between market price and the contract price),

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rescind the contract, forfeit the deposit, treat the contract as repudiated,
resell the property and recover his expenses and loss from the resale

If the offended party is the buyer, he may take out proceedings for specific
performance or rescind the contract and sue for refund of deposit or seek
damages for non-performance (difference in value between contract price
and the market price), interest, costs including legal costs and expenses of
searches etc.

NOTICE OF COMPLETION
Condition 4- The aggrieved party needs to give an unequivocal notice, the Notice should
explain the alleged breach and demand that it be made good within the notice period as per the
agreement and that in default; the agreement will be rescinded upon expiry of the notice.

Once ready to complete, the parties sign the conveyance and deliver the completion
documents at the completion meeting

Usually, completion documents comprise of:

The Original Title documents;
Transfer duly signed by the vendor
Land Rent Clearance Certificate; (For leasehold Titles only)
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);
Relevant consents applicable to the Transfer. i.e
Consent of the Commissioner of Lands to leasehold interests;
Consent of the Land Control Boards for Agricultural land obtained in
pursuance of the Land Control Act Cap 302 of the Laws of Kenya;
Consent of any chargee or Mortgagee having an interest in the land;
Consent of any statutory authority having an interest in neighbouring property
(e.g KPC, KAA, KCAA,) etc;
Notice of withdrawal of caveat or caution if there are any third parties having
an interest in the property;
Original Land Rent payment Receipts;

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Original Land Rates payment Receipts;

PIN of the vendor;
3 coloured photographs of the vendor or vendors directors
Copy of the Vendors ID

INTERIM PERIOD
The interim period as already stated between the execution of the contract and completion is
important for two reasons:

The performance of the various contractual obligations in preparation for completion

The risk of the property

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.

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
money. This is so long as the Contract is not subject to a condition precedent e.g. the
obtaining of a planning permission.

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 propertys condition does not deteriorate nor is the same wasted.
The Purchasers interest is however only in the property and not any income being derived
there from. As the Vendor is entitled to a lien on the property as security of the purchase
price, the Vendor will always retain possession.

He must however honour his duty to

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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.

ACTUAL COMPLETION
The parties once ready to complete the Conveyance (the Vendor ready to execute the Transfer
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 Vendors or the
Vendors 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 which will include:i) Consents;
ii) Clearances;
iii) Title Deed in original form;
iv) Photographs etc;
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.

POST COMPLETION
What need you do?
-

Report to and account to client.

Stamp documents

Register documents together

Notify the world

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COMPLETION UNDER THE GENERAL TERMS

(LSK CONDITIONS) cf. Condition 4.

TRANSFERS,CONVEYANCES AND TRANSMISSIONS

INTRODUCTION

What is a transfer?
See S2 LA- The passing of land, lease or a charge from one party to another by an
act of the parties and not by operation of the law. It also includes the instrument
that effects the passing

What is a conveyance/assignment?
Not defined by statute. Deed by which the owner of a freehold/leasehold property
whose title is subject to the deeds registry transfers ownership.

What is a 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

transfers the ownership of a freehold or

freehold property whose title is subject

a leasehold property (title) from one

to

person to another.

ownership. If interest is leasehold, the

S2 of Land Act- the passing of land, a

deed is called a deed of assignment. If

lease or a charge from one party to

freehold, it is called a deed of

another by an act of the parties and not

conveyance. Mainly under GLA and

by operation of law and includes the

LTA

instrument by which such passing is

Deed is a document that is signed sealed

effected.

and delivered, as well as there must be

Transfer of registered land under RTA

an intention to be bound.

and RLA(before their being repealed)

the

deeds

registry

transfers

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only purported to effect the transfer as

the

actual

transfer

occurred

on

registration.

Inter vivos-also called voluntary transfers

e.g. through sale, settlement or gift.

Inter vivos
Transfers

Upon
death

Both ITPA and RLA contemplated an

immediate transfer- see S87RLA. S44 LA

contingency

and

conditional

transfers

are

prohibited.

Transfer is only effected by the estate

owner- e.g. the legal owner, beneficial owner,

personal

representatives,

trustee,

chargee/mortgagee

General parts
Preliminary-date and parties: date is presumed to be correct until the contrary is proved. Date is
important for purposes of 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.

Operative part

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Recitals- explanation or background to the transaction. Two types- narrative (past

history of how vendor became owner) and introductory-why the existing state of
affairs is to be changed. They are not compulsory but are important.
Testatum- introduces a list of items

Consideration(states the whole purchase price)

Receipt clause (optional) shows the vendor acknowledges the receipt of

the purchase price. Dispenses with requirement for formal receipt

Word of grant(assigns or conveys)/transfers

Parcel- description of property

Habendum- quontum of interest granted

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 landeasement)

Miscellaneous provisions
Implied covenants especially under GLA

Final part
Testimonium- links the deed with the parties seal and signature. Not mandatory.
Its inclusion is proof that the deed was duly executed
Execution-signing and sealing.
Attestation-witnessing
Franking-providing of the name and address on the conveyance of the advocate
who prepared it-s35 of Advocates Act. Noncompliance is an offence and
Registrar may not register the instrument.
Memorandum-to which the instrument is subject to

GLA/LTA DEED

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.

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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.

TRANSFER

Use of statutory forms prescribed by RLA and RTA or instruments in conformity with
the Acts and approved by the Commissioner of Lands.

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.

S38(1) RLA- dealings in land subject to the Act must be in accordance with the Act.
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

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 doesnt merely record the instrument but passes
rights of ownership to the purchaser.

Statutory forms in RTA and RLA were varied by LN 146-153 to include further details of
PIN no, ID, coloured passport photographs etc

Responsibility for drafting rests with the purchasers advocates and it is approved by the
vendors advocates

RLA prescribed form can only be varied by the Registrars written approval.

RTA variations do not require Registrars approval. It is ordinarily prepared as a deed.

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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;

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)

New Regime

The new legal regime introduces compulsory use of prescribed forms for dispositions in
land. Since no forms have been prescribed as yet, we shall only delve into substantive
law.
S43(2)LA- transfer to be effected by an instrument in the prescribed form
S43(3)LA- completion of transfer process only after registration
S36 (1) LRA dealings in land only in accordance with the Act
S37LRA- transfer by an instrument in prescribed form of from approved by
Registrar. Filling the prescribed from and registration completes the transfer.
S40 LRA-contingency or conditional transfers prohibited
S43(2)LRA- Transfer effective only upon registration
S44(4)LRA requirement for endorsement (in prescribed manner)of signatures of
persons outside the country

Other requirements S44(5) LRA Copy of ID/passport

Copy of PIN
Passport size photographs
Marriage certificate where applicable

Verification of execution required.

Involuntary transfers (by operation of law)

Death
Court Attachment and Sale
Vesting Order

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Bankruptcy or Insolvency
Adverse Possession
Compulsory Acquisition

Transmission: Company liquidation

Companies Act(cap 486), S 53 LA and S64 LRA

The Registrar is presented with a resolution or order appointing a liquidator which he

shall enter in the register, any instrument will thereafter be sealed with the companys
seal but attested by the liquidator

Transmission: Bankruptcy

Read Bankruptcy Act cap 53

S52LA and S63 LRA-

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

Transmission: vesting orders

A court order that creates or transfers legal ownership of a property in place of a legal
conveyance. See Trustees Act Cap 167 Ss 45-56

Instances
Court ordered purchases/sales of mortgaged land s48
Specific performance of contract where parties are trustees-s 49
Trustee has not exercised their duty in the disposition of interests in property s45
Interests in land subject to a contingent right of an unborn person, when born
court may make an order-s 46
Infant mortgagees-S47

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Transmission in other cases

S54 LA, S65 LRA- if one is entitled to property under any law by virtue of an order,
certificate of sale, one needs to apply to Registrar with supporting documents for
registration as proprietor.

Attachment for debt: Order 22 Rule 55

Land plus Judgement Debtors(JD) other personal effects may be seized in execution of a

court decree for payment of JDs debts.

Sale is by public auction-auctioneer= Courts agent
Sale agreement is signed by purchaser. Proceeds of sale are deposited in Court
and paid out to the Judgement Creditor(JC)
To complete the sale the purchaser applies for Courts vesting order which the
Registrar uses to register new owner.
JC may place a prohibitory order against the property while the process is
ongoing.
The Court may on application by JC order that the transfer be executed by the
Registrar of the High Court in lieu of the JD/vendor
Transmission: death

Transmission by succession

Testacy

death

Intestacy

Escheat

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Transmission upon death

Sole proprietor or proprietor in common:

Testate/will- executor will prove the will in court and obtain probate, apply to
Registrar in prescribed form and produce grant. He is then registered by
transmission as proprietor or the registrar may register any transfer by him
directly to third party without requiring his registration as proprietor (by assent)S50 LA, S61 LRA.

Joint tenancy- S 49 LA, S60 LRA- the 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 registrar on production of the death certificate.

Escheat-When the deceased has no heirs to his property. The property reverts to the state.
It used to be covered by S 8A of GLA(now repealed)

Adverse Possession

S7 and 17 of the Limitation of Actions Act provide for a 12 year limitation period for the
recovery of land. S37 &S38 if land is registered then it is held in trust from the adverse
possessor until he obtains a vesting order from the High Court.

Possession alone is not enough, there must be proof of adverse possession (Bwana V
Ibrahim(1948)EACA 7, Volume 20 pg 699, Halsburys Laws of England

Basic requirements:
Open and notorious use;
Intention to possess;
Continuous use;
Exclusive use- to the exclusion of the owner;
Actual possession;
Non-permissive, hostile/adverse use-without owners permission and inconsistent
with his rights

Point of Reflection-Does an adverse possessor need consent of the Land Control Board?
If so by when? (see KaranjaMatheri V Kanji(1976)KLR 140, Gatimu V
Kinguru(1976)KLR 253- The Court can order registration of one as a proprietor even
though no consent has been obtained.

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Compulsory Acquisition

State is the owner of radical title-eminent domain. The Constitution gives the State the
power to compulsorily acquire land for public purposes. This was previously
implemented through the Land Acquisition Act.

The Act empowered the Commissioner upon due notice in the Kenya Gazette and
payment of full compensation to acquire land.

See Art. 40(3) right to own property limited- for public purpose/public interest, there is
prompt payment in full of just compensation

Public interest see Mohammed v Commissioner of Lands and others(2006)KLR (E&L)

217

Compensation Courts have held that market value plus 15% should be paid.

Compulsory Acquisition- New Regime

S107- 133 LA

If public purpose or interest ceases to exist, the Commissioner may offer the original
owner pre-emptive rights to reacquire the property.-S110 LA

Commission to make rules to ascertain just compensation S 111 LA. One can be given
land in lieu of the award

S 132 LA- transactions are exempt from stamp duty

What have we learnt?

Definitions of Transfer and Transmission
Parts of a transfer document
Instances of transmission
Various transfer documents in the old regime still transiting to the new regime

What we are going to learn

Interests capable of transfer
Transfers without consideration

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Issuance, loss and replacement of title documents

Subdivisions and surveys

LEGAL INTERESTS CAPABLE OF BEING TRANSFERRED

Freehold

TRANSFER- S 2 of LA & S 37 (1)

LRA

Charge

S37(2) deals with the transfer of all the 3 types of interests.

PROCESS

Filling of the prescribed instrument

Registration of transferee as proprietor of land, lease or charge

S32 LRA-produce original& duplicate lease or charge for registration of any disposition in the
document including transfer.

TRANSFER OF LEASE

S45 LA- 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

S 71 LA has similar provision

S72-transferee becomes the lessee

TRANSFER OF CHARGE

S86(1) LA

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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.

Chargors consent to transfer charge required if the charge instrument expressly or

impliedly says so(S87)

FREEDOM TO TRANSFER?

Bill of Rights in the Constitution

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

Article 65-You 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.

WHAT OF CONSIDERATION?

S43(2)LA, S27(1) LRA- one can transfer land, lease or charge to any person including
himself with or without 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. In this case the transfer documents indicate that the consideration is love and
affection. How does this fit in with the phrase without consideration above? S27(2)
LRA same effect as transfer with consideration

TRANSFER WITHOUT CONSIDERATION

To oneself - Change of name

To spouse

To beneficiaries

Gift

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GIFTS

What is a gift? Something given voluntarily without payment in return to show

favour, honour, assistance or a present

Land as a gift- no consideration?

Giver= donor, Recipient= done

The gift must be accepted by donee during the lifetime of donor

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

See the Registered Trustees of the Anglican Church, Mbeere Diocese Vs. Rev.
David Waweru (2007)eKLR Civil Appeal 108 of 2002. The Respondent(Rev.
Waweru), had donated his land to the church. He obtianed LCB consent and 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 suprior court held in his favour. The Court of Appeal held in
favour of the Church using the above principle that where the donor has fulfilled all
legal requirements of a transferor, the property belongs to the donee.

S49 LRA- donee with legal incapacity may transfer back property within 6 months
after the end of incapacity

DISSOLUTION OF MARRIAGE
We havent embraced pre-nuptial agreements. Are they of any force especially if they are in
conflict with written law? MWPA of 1888 is applicable in Kenya as a statute of general
application(S3 of Judicature Act). S17 of the Act entrenched the right of women to own property
in their names if acquired before marriage. Also provided that the High Court can adjudicate over
disputes concerning matrimonial property

MATRIMONIAL PROPERTY
Petit V Petit, 1969 All ER 385, Wife bought property in her name, husband only painted. The
court held that he was not entitled to the propety
Gissing V Gissing 1970 2AllER 780, wife was considered to have directly contributed

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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.

ISSUANCE, LOSS AND REPLACEMENT OF TITLE DOCUMENTS

S24 LRA- registration vests interest of absolute ownership or leasehold interest in transferee.
S25 LRA -registered proprietors rights, for valuable consideration or by court order shall not be
defeated except under the Act. S26 LRA- issuance of certificate of title or lease is conclusive
evidence of proprietorship. S33 LRA- one can be issued with a duplicate certificate of lease or
title if it is lost or destroyed. Proof of loss or destruction required and statutory declaration shall
be required by registrar.

SUBDIVISION AND SURVEY/ DEVELOPMENT CONVEYANCING

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 S 22 of
the Survey Act (cap 299). S22LRA, 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. S
42LRA prohibits part transfers before formal subdivision.

SUBDIVISIONS AND AMALGAMATION

The proprietor hires a physical planner and land surveyor to develop a subdivision/amalgamation
report. 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 eg infrastructural development(roads, water, storm drainage, sewer, electricity. The

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Council can recommend issuance of 30% of titles for sale to support these infrastructural
developments. The Land owner takes the approval letter to MoL to process titles. The
Commissioner of Lands (CoL) circulates the application for approval to Director of Physical
Planning and Director of Survey.If approved CoL issues conditional approval and sets out fees
payable and conditions to be complied with.Application sent for valuation, to ascertain new land
rent. CoL grants final approval after council gives final approval.Compare this with sectional
properties. Which one is less complicated? Which one is more economical for the developer?

THE MINISTRY OF LANDS

1.

Departments of MoL

Administration & Planning

Surveys

Physical Planning

Lands

Land Adjudication

LANDS

1. Land policy formulation

Management and custody of land resource
records
3. Administration of Government and Trust lands
4. Registration of titles and various transactions
5. Land valuation for various purposes
6. Resolution of land and boundary disputes
7. Generation of revenue and collection of
allocation in aid
2.

Lands

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3. DIVISIONS

Land Administration

Valuation

Land Registration

Alienation of govt and trust land, title

preparation for govt and trust land, land rent
clearance certificates and commissioners
consent, Processing of development
applications, subdivisions and amalgamations
Stamp duty, rent apportionment for
amalgamations and subdivisions, valuation for
rating, land rent, determine market value of
land, asset valuation of govt institutions,
valuation for compulsory acquisition, required
by court order etc

Stamping and registration of documents

REGISTRATION PROCESS
Stamping

Documents presented for assessment of stamp duty at banking hall

Assessor of Stamp Duty confirms whether duty is payable and then issues KRA stamp duty
assessment form to be completed

Assessor assesses the amount of stamp duty payable. Applicant pays at KCB or NBK

Applicant brings back document and form together with proof of payment

Bank makes reconciliation of payments received and gives collector of stamp duty statements
of payments(takes 2 days)

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Documents are stamped and given to accountant to countercheck payments and then to
auditors to audit

Documents picked for registration

Registration
Previously we had several registries

RTA-2 registries (Nairobi Central Registry and Mombasa Central Registry)

GLA, Nairobi Central Registry

LTA, Mombasa Central Registry

RLA, various District Registries

RDA, Principle Registry in Nairobi, for all matters outside Coast & Coast Registry for
matters within the Coastal region.

New Regime
Registries to be constituted by the Commission- see S6 &7 LRA. A land Registry in each
registration unit.

Blocks
Registration Sections
Blocks
Registration Units

Registration Sections

Blocks

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Procedure

Present document plus completed application for registration form in quadruplicate to

booking counter. They are stamped with received stamp

Day book number is indicated on both the documents and forms for follow up

Auditor checks documents to ensure payment in terms of stamp duty

Strong room officer retrieves relevant files and matches the documents

Investigation officer checks whether they are properly drawn and that there are no
encumbrances, may make recommendation for registration

The documents are given to the registry superintendent who assigns them to assistant
registrars to make entries

Assistant registrars enter the transaction on original title(RTA) and indicate the time and
date of registration which is the date of booking documents. RLA new certificate of
Lease/Title Deed is prepared

Documents are passed the Registrar who will sign if found to be in order

Documents sealed and photocopied( no need for photocopying of RLA as original title is
retained)

Where There Is Subdivision or Amalgamation

The investigating officer refer the deed plans to the Department of Surveys for confirmation and
they in turn refer the documents to the valuation division for rent apportionment and assessment.

ADDITIONAL NOTES ON TRANSFER

TRANSFERS
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 S.54 ITPA & s.3 RLA
Openda v Khan
Sale agreement creates no interest over the property
The transfer is always drawn by the plaintiffs advocate save in very exceptional circumstances
e.g. in mortgages and subleases
Salim v Okongo [1976] KLR 42

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LSK Condition 24 Transfer can be drawn by the purchasers advocate. The drafting
responsibility is then in a way passed to the vendors advocate when his approval is so sought.
Purchasers advocate ensures the purchaser really obtains the interest in land sold.

Forms of transfer
This depends on:
a) statute applicable
b) interest to be transferred

For RLA land, forms are prescribed which are mandatory under s.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.Under RTA, s.34 provides the form which is NOT mandatory and you
can adjust it mutates 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.
Under RLA if a leasehold prepare a transfer of lease Form RL2 .If freehold prepare a transfer
of land-use RL 1. 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 which interest is a freehold.An assignment refers to a document used for purposes
of transferring an interest registered under the GLA or LTA which is a leasehold interest.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.

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. Do
not use them blindly.

Under the GLA, one talks about;

a) A deed of conveyance transfer of freehold

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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.

Specimen Deed of Conveyance

See Handout
Commencement Refers to the title of the deed itself.
Date The execution date is the most appropriate to insert to the document.

Date stamp duty

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.

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 vendors address ought to be the same as the address in the last purchase deed and
perhaps even similar signature to curb fraudulent transactions

Recitals these are two-fold:

a) Narrative recital i.e. the recital of the title
b) Introductory recital i.e. the recital of the contract

It begins with the word WHEREAS.

The narrative recital sets out the vendors title. It makes it easily understood for purposes of the
conveyance. 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.
Testatum This where the deed begins:
NOW THIS CONVEYANCE WITNESSETH

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It is a declaration that what follows in the body of the deed contains details of the operation of
the deed.
Consideration 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 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.
b) It avails:

The remedy of specific performance

It helps the government to determine how to charge

Particular transactions by the parties i.e. stamp duty, income tax

Receipt clause this is necessary in the body of the deed or in the transfer deed as it enables the
purchaser and the purchasers 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.
Operative words 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
NOTE:
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

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e) Lease - Issue a demise

f) Discharge GLA Release and reconvey

Note: the capacity of parties really matters e.g.

-

Beneficial owner

Trustee

Administrator

Attorney

This will show existence of power to transfer the property

Parcels clause Technical term denoting the description in words of the property being
transferred, conveyed or assigned. It should be strictly accurate and includes sketchmaps, 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 misdescription of the property can be
corrected by variation. Avoid misdescriptions because vendor can play dirty making your right
of rectification useless.
Habendum 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
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.Testimonium This is the part
that now links the execution or the affirmation of the deed with the rest of the document IN
WITNESS WHEREOF

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Attestation/verification 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 deemed when the parties execute the document. Legal Notices No.146 153
of 2005 require that when you prepare a deed of assignment or transfer, you attach photographs
of the parties

Note: The schedule strictly and ideally speaking out to be inserted between the testimonium and
the execution clauses to avoid fraudulent changes thereunder.

Under the RLA, the forms are very simple i.e.

1. Commencement clause
2. Parties clause
3. Consideration/operative clause
Note: No parcels clause as this found in the commencement clause
If there are covenants, one has to seek permission to vary the form from the Land Registrar.

OTHER DEEDS OF TRANSFER

a) Vesting Order order by the court for the purpose of conveyance. Does not exist under
the RTA, GLA, RLA or LTA. It is an order by the court for the purpose of
conveyancing/creating a legal estate and it operates to vest the estate/interest in the same
manner as if it had been a transfer or a conveyance executed by the estate owner. Only in
this case, the vesting order is executed by a high court judge.
The Trustees Act Cap 167 grants this jurisdiction to the High Court puisne judges (S.5-56 sets
out the various instances when a vesting order can be issued e.g. s.48 where the High Court has
ordered the sale of the property. Also applies where the court sells the property in execution of a
decree. Also where the court orders specific performance. It is applied for by way of an
originating Motion or Summons.
The person acquiring that interest prepares a vesting order and sends it to court for approval and
execution by a High Court judge. A vesting order is a transfer which is supposed to fetch stamp
duty. Also issued where the trustees are not acting e.g. refusing to subdivide.

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b) Transmissions
These are transfers save that the interest in land/lease from one person to another is by an act of
or operation of the law. This will happen when:

Somebody dies

Somebody is declared bankrupt

The form that the transmission dictates is either an assent or a basic transfer of interest in an
estate by an administrator form. Assent applies when dealing with the estate of a deceased
person where the land is registered under the GLA, LTA or RTA. In the document, ones title is
only as far as one is an administrator. RLA has a specific form for it.

c) Sub-leases
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 Sublease
-

The term to be granted in the sublease will depend on the

headlease 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.

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The reversionary interest will vest in the management company.

The building/architectural or site plans will be annexed to the sublease, 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.

SUBLEASES & SECTIONAL PROPERTIES

1) They are dependant on the headlease
2) They depend on a management company

Under the sectional title, the format of the transfer takes the form of prescribed instruments under
RLA. Rationale: The substantive law recognised in Kenya is RLA

The Sectional Properties Act was enacted in 1990 to facilitate transfer of flats through mortgage
finance. The lenders objected to subleases as security because:d) 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 wasnt guaranteed.
e) Even where extension was guaranteed, the terms of extension were
unknown and uncertain therefore not good security
f) There was a distinct possibility that the head lessor would fail to apply
for extension of the lease
g) 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:

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1. 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.
2. 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

The main difference between subleases and sectional properties is ownership of

property.Termination of the corporate body is unanimously by all the members of the body or
through the court (by members unanimously agreeing)

Distinctive features of Sectional Properties v Subleases

1) Operative law in sectional properties is RLA while in subleases it could be RLA, RTA or
GLA
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
3) The corporate entity is registered automatically under s.17 of the Sectional Properties
Act, while in subleases, 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

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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.

TRANSFERS AND PARTS OF A CONVEYANCE (ONGUTOS)

TRANSFERS
Whilst Sale Agreements are always drawn by the Vendor and forwarded to the Purchaser for
approval,it is the converse with transfers. Transfers are drawn by the Purchasers Advocates and
forwarded forapproval by the Vendor. It is the Transfer that actually causes the disposition of an
interest in land onceits registered. (See Section 54 of the ITPA, Section 3 of the RLA as to
definition of disposition and alsoLSK Condition 24). (cf. use of precedents. What are the
dangers?)

PARTS OF A CONVEYANCE
Most conveyancing documents (e.g. conveyance, assignment, transfer, mortgage, charge) will
besides theadministrative information i.e. the relevant registry, contain the following parts:
1. Commencement clause
This clause will comprise of details concerning the nature of the document, date and a
briefdescription of the parties. It ordinarily commences THIS CONVEYANCE or
THISTRANSFER. The date is always the date of execution by the vendor or assignor of
interest.

2. Recitals
Constitute the descriptive parts of the document. There are two types of recitals: theintroductory
recitals and the narrative recitals. The introductory recital for a sale agreement willfor instance
read as follows: the vendor has agreed to sell and the purchaser has agreed to buy all
thatparcel of land known as Title Number Nyahururu Municipality Block 15/896 Narrative
recitals willfor instance read as follows The purchaser admits that he has inspected the

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property and purchases asa result of that inspection and not in reliance of anything warranted
by the vendor either orally or in2writing.. The recitals clause starts with the word
WHEREAS and whilst narrative recitalsare designed to make the title more intelligible as they
provide a history of the property from theroot to present day, introductory recitals are intended to
explain the intention of both thedocument itself and of the parties.

3. Operative Clause
Comprises of the testatum, consideration clause, receipt clause, the operative words,
parcelsclause, habendum and the reddendum for leases.
(a) The Testatum is the clause that begins with words such as NOW THIS
DEEDWITNESSETH or NOW THIS LEASE WITNESSETH... It is basically a
declarationthat what follows contains details of the operation of the deed.
(b)

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 abovereferenced parcel of land. Besides being necessary for purposes of the Stamp
Duty Act it isalso necessary to avail the purchaser the remedy of specific performance.
(c) The receipt clause will read something like Receipt whereof the transferor
herebyacknowledges. The clause avails to the purchaser or transferee the protection under
thenorm of the bona fide purchaser for value without notice in the event of any claim by athird
party.
(d) The operative words basically contain the words of the grant and capacity of the vendor.
Words of the grant are a statement as to what the vendor does by virtue of the deed orthe
transfer. They include Grant for conveying freeholds under the GLA, Assign forassigning
leaseholds under the GLA and Transfer for transferring leaseholds andfreeholds under the
RTA.
(e) 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 parcelof
land known as I. R. No. 94453. or all the parcel of land known as Title
NumberNairobi/Block 74/41. Note however that a false description or misdescription does
notvitiate the deed.

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(f) The Habendum clause describes the interest created. It defines the estate conveyed to
thetransferee or purchaser. It defines the quantum of interest created. E.g. The
transferortransfers unto the transferee all his title, right and interest in L. R. No. 209/15432 TO
HOLDabsolutely The reddendum clause appears in leases only. It begins with words
YIELDING AND PAYING . This part explains the amount of rental payable by thetenant and
when it is to be paid.

4. Covenants
These are the express agreements and obligations of the parties. For instance in a lease
documentcovenants will constitute the agreements of the parties such as the agreement to yield
back on thepart of the tenants upon expiry, the obligation/agreement on the part of the tenant to
pay rent onthe date agreed, the agreement/obligation on the part of the landlord to insure and
repair theexternals of the structure leased etc.

5. Testimonium
It begins with words such as IN WITNESS WHEREOF This is the part of the document
thatlinks the preceding parts of the document with the seal and signature part.
6. Execution
This is where the parties affix their seals and signatures as the case may be. This is also a key
partof the document.
7. Attestation Clause
This is where the witnesses to the signature sign. It will contain words such as In the
presenceof. Normally attestation will be by the parties advocate in whose presence the
document wassigned.
8. Verification Clause
This is the clause that provides that a party appeared before an advocate and was
propertyidentified by his I/D or was personally known to the advocate and that he understood the
importor contents of a document and that he signed voluntarily. It was previously a requirement
ofcertain documents under the RLA but with recent amendments to the law in November 2005

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isnow a requirement of practically most conveyancing documents because of the requirement

ofpassport size photos, PIN and identity card numbers.

CONSTRUCTION OF DOCUMENTS
There are 8 fundamental rules of construction. These rules are enumerated and expounded on
hereinbelow:
1. Express intention of the parties
Courts of law will look at the exact words used by parties in construing a document. The
generalrule is that a court of law will not presume the parties intention in construing a
document.
Clarity and simplicity are paramount in discerning the parties express intention. The use ofplain,
simple language and short words and brief sentences is advisable. This is the best way todraft
contracts. It is also the modern way. Complex language can cloud peoples minds.

2. In construing a document a court will read the whole document. For instance where the
wholedocument includes a lease and Further lease a court of law will read both the lease and
theFurther lease in-order to discern the intention of the parties. The document too is to be read in
itsentirety and not selectively.
3. Words must be given their ordinary meaning
Ordinary meaning is the accepted grammatical meaning of the words. There are however
twoexceptions to this rule. Courts of law will sometimes give words their special, technical
orcustomary meaning. For instance in a contract the words person will also include
company,singular in many cases can be taken to include the feminine. Further, where the court is
of theopinion that the ordinary meaning would lead to some absurdity, repugnancy or
inconsistencywith the rest of the document it will modify the meaning of that word to avoid such
a result.

4. Extrinsic evidence will not be allowed to vary or contradict the term of a document.
The only exceptions are:
(i) Extrinsic evidence can be admissible to explain the meaning of word used or to resolvelatent
ambiguity.

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(ii) Surrounding circumstances existing at the time of the time of executing the documentmay be
looked at to place the court in the position of the parties.
(iii) Extrinsic evidence is admissible to show that a document is not binding on grounds offraud
or mutual mistake.

5. Clerical errors will be corrected in accordance with proper grammatical spelling of the
words butthe correction must be so as to give effect to a parties true intention as
appearing in the whole ofthe documents.Self-explanatory.
6.
6. Contra-Preferentum Rule where the document has been drafted in a language chosen by
one ofthe parties the document must be construed against the person who drafted it in the event
of anyambiguity.
7. Ejusdem Generis Rule
Where general words follow words of a peculiar class the general words must be construed
aslimited to the same kind as the particular words. E.g. in the phrase cows goat sheep
andother animals the general words and any other animals will be interpreted to refer to
domesticanimals.
8. ExpessioUnius exclusion alterius Rule
The general rule in law is that an express provision will automatically oust an implied
provision.Implied terms in a lease as are contained in Sections 53, 54 of the RLA and Section
108 of theITPA will be ousted by express provisions contained in the lease document executed
by theparties. Alongside this rule too is the rule that falsademonstratio non nocet. This latter
rule is tothe effect that a false description in a document does not prejudice or vitiate its effect.
This latterrule is particularly applicable when interpreting the parcels clause.

REMEDIES
Remedies are applicable in Conveyancing when the transaction for whatever reason is not
completed orwhen it is completed but one party still feels aggrieved. The remedies are either
statutory, equitable orobtainable under common law.

COMMON LAW

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These fall into two categories

1. Damages
The whole purport is to ensure that the aggrieved party is compensated and thus restituted as
ifthe contract or transaction had actually been properly performed and completed. For this
reasondamages will be compensatory. The injured party seeks compensation for the loss
occasioned bythe breach which may lead to non-completion or completion but with some loss. In
the case ofnon completion due to breach on the part of the Vendor, the Purchaser shall be entitled
todamages for loss of bargain. Substantial damage may also be sought by the Purchaser
wherethough the contract is performed there has been delay in completion or the Vendor fails to
givevacant possession. To succeed however the Purchaser must establish his own ability to
performthe contract. (cf. when is assessment of damages made: at date of breach or date of
judgment?)Damages may also be sought as a collateral remedy to any other remedy available to
theaggrieved party.

2. Rescission
This is basically the undoing of the contract by the court or the party aggrieved. It may
berescission ab initio which describes the effect of the relief that is normally available when
theformation of a contract is affected by some vitiating factor such as fraud. The contract is
hereannulled and parties restored to the position they occupied before the contract was made.
i.e.restitution in integrum. Rescission may also be rescission for breach. This connotes
theconsequence of an innocent partys acceptance of the repudiation of the contract by the
otherpartys breach of an essential term. This acceptance however does not result in rescission
ab initioand the innocent partys entitlement to damages for breach remains intact. Rescission for
breachwill arise where there is a misdescription or misrepresentation by one party or presentation
of adefective title or even for failure to complete on the completion date and or after a notice
tocomplete has been given.

EQUITABLE REMEDIES
The special character of land has led equity to ensure that a Purchaser or Vendor for that matter
is notleft content simply with the common law remedy of damages for breach of contract.

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Damages may neverconstitute adequate compensation for him. Two main equitable remedies
exist in equity to parties to aconveyancing transaction:

Specific Performance
This is a remedy available to and peculiar to land transactions. The Plaintiff (Purchaser
orVendor) seeks a decree from the court ordering the other party to perform the
contractspecifically. There is no need for breach of the contract itself to be entitled to
specificperformance.(see: Hasham vs- Zenab 1960 AC 316). The remedy is however
discretionary and the principlesof equity will be applicable. E.g. Equality is equity: thus it is
available to both Vendor an Purchaser. Equity does not act in vain: thus if property has been
disposed of by the Vendor theremedy of specific performance will not lie.

Injunctions
This is also another equitable remedy. Breach or threatened breach must however be proven.
STATUTORY REMEDIES
A number of remedies are also available under statute to aggrieved parties.
Rectification available under the RLA (S.142), RTA(S.59), LTA (S.81), GLA (S.120)
Mortgagees/Chargees statutory powers of sale/appointment of receiver. RLA (S.74), TPA
(S.69)
Damages available to Mortgagors and Chargors under S. 69 of the ITPA.
Forfeiture by lessors under S. 56RLA and S.112 ITPA.
JLO-AUGUST, 2008
louis@swiftkenya.com

CHARGES

Definitions

Distinctions

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Terminologies

Further and Second Charges

Duties and Responsibilities of Lender/Borrowers Advocate

Form of charges

Remedies of the Chargee/Chargor

Reconveyances/Reassignments and Discharges

DEFINITION CHARGE

S2 LA, S 3 RLA- an interest in land securing the payment of money or moneys worth or
the fulfilment of any condition and includes a sub-charge and the instrument creating a
charge.

Simply put- security for loan with an undertaking for repayment. It confers certain rights
to the Chargee from the Chargor

S46 RTA advance of security by lender against a registered charge. The substantive laws100 A of ITPA which equates a legal charge under s 46 to the English legal mortgage

S65 &84 RLA- charge operates as security but not a transfer S65(4). It was the only form
of security.

S 80(1) LA- Charge to operate as security only and not as a transfer of any interest or
rights in land

DEFINITION: MORTGAGE
ITPA defines a mortgage as
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

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

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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.

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 a mutual rights of action

DISTINCTION

Mortgage- conveyance or assignment of land with proviso for reconveyance or

reassignment

Charge-confers rights to chargee to enable him 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

TYPES
- S 58 ITPA

Simple mortgage: no delivery of possession but mortgagor binds himself to pay or the
property will be sold

Mortgage by conditional sale: the mortgagor sells the property to the mortgagee on
condition that the sale will become absolute upon default

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Usufructuary mortgage: possession is delivered with authority to retain it until

payment, the mortgagee also obtains rights to secure rent and profits to repay.

English(legal):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)

EQUITABLE
Creature of Equity. Traditionally there are 4 ways of creation of equitable mortgages

By deposit of title

Where money has been advanced and the mortgagee agrees to execute a legal
mortgage

If the estate or interest is equitable

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)
Barclays Bank DCO V Gulu Millers (1959)EA 540
Samuel Kenneth Ondendaal& the official receiver V Richard Gray (1960)EA 263

LEGAL OR ENGLISH MORTGAGE

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 substa

LEGAL VS EQUITABLE MORTGAGE

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Legal- transfers legal interest in land whether leasehold or freehold from mortgagor to
mortgagee. It must be created by deed or statutory form

Importance

It is easier to enforce

Priority-a legal mortgage without prior notice of an equitable mortgage takes priority
over the equitable mortgage

Less prone to fraud than equitable mortgage where a borrower can obtain a provisional
title and deal with the property.

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

Small amounts

Short repayment periods

Urgency

EQUITABLE

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 MORTGAGE

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

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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

TYPES UNDER THE NEW REGIME

LA recognizes
a) Formal charge: S79 (5) LA, prescribed instrument in prescribed register
b) Informal charge:S79(6) LA:

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

S26 LRA certificate of title is conclusive evidence of proprietorship (this was the position with
RTA)

Further V Second Charge S57LRA

Further- additional facility by the same lender to the same borrower on the security of the
same property

Second a separate charge over the same property to a different lender.

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 assiging the debt. The
subchargee has the double security of the original chargor and the original chargee.
Basic Requirements of a Charge
S 46 RTA forms J (1) and J (2)
a) There must be a chargor
b) Name and description of lender
c) Description of property
d) Amount advanced
e) Acknowledgement of receipt of loan
f) Covenant to repay principal & interest

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g) Special conditions (if any)

h) A charging clause
S 80(3) LA every charge instrument to contain:a) The terms and conditions of sale
b) An explanation of the consequences of default
c) The reliefs that the chargee is entitled to including the right of sale.

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 eg the tenant purchase scheme.

Employees housing scheme

DUTIES OF ADVOCATES
Process of securitization starts with application by borrower for a loan. Lender will ensure that
due diligence is carried out- iecredit assessment of borrower and evaluation of property (this is
an internal process, if approached advise the bank to seek help of other professionals such as
valuersetc).
Duties of Chargees Advocates
1. The bank will then involve its advocates once it has prepared and secured the execution
of the offer letter by both parties
2. The following details are contained in the offer letter
a) Details of the parties- full names and addresses(borrower, lender, guarantor)
b) Amount to be lent/borrowed and amount to be secured by the property
c) Repayment period and repayment mode(monthly, quarterly
d) Particulars of property to be charged(title no or land reference no.
e) Details of intended security(informal or formal charge)
3. Advise the bank On

The appropriate security, Informal(equitable) vs formal(legal) charge

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4. Proper investigation of title

5. Confirm the capacity of chargor
a) Company- confirm if memorandum and articles allow for borrowing and
charging
b) If Trustees-confirm if trust deed allows for borrowing and charging
6. Draft charge and send to borrowers advocates for approval(mostly take it or leave it)
7. Confirm execution and attestation- Is Advocate qualified? Ndolo Ayah case
8. Engross the charge and send it for execution and attestation
9. Ensure execution and attestation is done in accordance with the law
10. Dispatch document to the lender for execution and attestation
11. Pay stamp duty (obtain from the borrower)
12. 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
13. Forward the perfected documents to your client with a report on the title confirming the
registration
14. Obtain loan proceeds from chargee for onward transmission to the chargor
15. Follow up on fee payment
DUTIES OF BORROWERS ADVOCATE

Discuss offer letter with borrower and advise on effect of security

Obtain all requisite consents, clearances from seller (usually upon a professional undertaking
for payment upon registration)

Obtain original title from seller (usually upon a professional undertaking for payment upon
registration)

Obtain a professional undertaking from the lenders advocates that they will not use the title
document for any other purpose than for the transaction

Approve the charge

Explain the contents of the charge to your client and its effect

Obtain adequate funds for stamp duty

Conflicts of interests

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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 Obrien (1994)1 AC 180- the transaction can be challenged on this ground.

SUBSEQUENT CHARGES/ PRIORITIES

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 S81 LA.

TACKING
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.

CASE LAW
Angwenyi&Ano V 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 &Ano. V Fidelity Commercial Bank &Ano. (2003) 2 EA 541

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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 AnthanusNgotho t/a Ngotho Architects Vs NIC Bank Ltd HCCC No, 319 0f 2003
Mortgage prepared by mortgagees 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.

IMPLIED TERMS S 88LA

a) To pay principle money on day appointed in charge and interest at rates agreed upon
b) Pay all rates, charges, rent, taxes and other outgoings
c) Repair and keep in repair all buildings and other improvements
d) Insure
e) Use land in a sustainable manner
f) Not to lease or sublease for more than a year without consent of chargee
g) Not to transfer, assign or lease without written consent of chargee
h) If a lease; to pay rent perform and observe covenants in the lease
i) If a second or subsequent charge, to pay interest on each prior charge when they fall due
j) In 2, 3, 4, 5 and 8 chargee may pay on behalf of chargor and include the amount so paid in
principal amount

FORM AND CONTENT OF A FORMAL CHARGE

Commencement date
The Parties
Principal amount
Recitals- the following facts are recited
The borrowers title
Agreement to lend/borrow

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Agreement to create a legal charge

CONTENT
Testatum (now this Charge witnesses)

Covenant to pay

Interest

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

Charging clause.... Charge the premises as continuing security for the payment and discharge
in full of the secured obligations

Chargors covenants

Events of default

Banks remedies
Serve notice as per Section 90 LA and if the Chargor does not comply(S90 (3)LA:
a) Sue the chargor for any money due under the charge
b) Appoint a receiver of income of the premises
c) Lease or sublease the premises
d) Enter into possession of the premises
e) Sell the premises

Statutory power of sale

Before salea) Serve 40 day notice
b) Value the premises
c) Prioritization of application of proceeds from sale ie rates, rent, taxes, discharge of prior
charge, all costs and reasonable expenses, discharge of principal amount, payment of
subsequent charges

Further advances (S 82 LA), To rank in priority to any subsequent charge

Right of consolidation- (S 83 LA), Chargee may consolidate

Application of monies- to satisfy the debt

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Indemnity- chargor to indemnify chargee/receiver

Power of attorney- chargor appoints the chargee to be attorney of chargor

Discharge- upon payment of final balance

Matters to be noted in the register- the banks rights of tacking and consolidation

Governing law

ATTESTATION AND EXECUTION

S 38 LA, Contract for the disposition of an interest in land must be:

In writing

Signed by all parties thereto

Attested by a witness who was present when it was signed

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.
S44(3)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. S45(1)LRA a person executing the instrument is required to appear before the
registrar, public officer or 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 instrument and shall complete a
certificate to that effect. (S45(2)LRA). This execution process must be followed whenever
executing all instruments under the meaning of disposition( which includes an agreement to
undertake these dispositions). Does this then mean facility letters for credit facilities, letters of
offer? S56(1)LRA requires that for charges the chargor must acknowledge that he understands
the effect of s 90 of the LA which among other things provides for the remedies of the chargee.
Signed by the Chargor

ID No:................................

xxxxxxxxxxxxxxxxxx

PIN No...............................

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In the presence of

.................................................

................................................

Chargors Signature

Advocates signature
I,

yyyyyyyyyyyyyyyyyyyyy, an

I, the above named chargor acknowledge

advocate of the High Court

that i understand the effect of Section

of Kenya who witnessed the

90 of the Land Act (the Act) and the

execution of this Charge,

Chargees remedies under this charge

CERTIFY that the above

and I hereby agree that the Chargees

named

appeared

rights under Sections 82 and 83 of the

before me on the ....day of

Act and restrictions under Section 87

....2012 and(being known to

of the Act and Section 59 of the Land

me/being identified to me by

Registration Act be noted against the

sssssssssss acknowledge the

above title.

chargor

above signature or mark to

.................................

be his/hers and that he/she

Chargors signature

had

freely and voluntarily

executed this instrument and

understood its contents

Signed by ppppppppppp
The duly constituted Attorney of the chargee
Under and by virtue of a Power of Attorney registered at the Lands Titles Registry as
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

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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 officials signature
RETROSPECTIVE EFFECT
Part VII of the LA S 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).

VARIATION OF INTEREST
S 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

Giving the chargor 30 days notice of the reduction or increase in the rate of
interest

Stating clearly and in a manner likely to be understood the new rate of

interest.

Its important for banks to keep proof of such service

Fraud, Dishonesty and Misinterpretation of Prior Chargee

S81(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
S79 (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.

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A matrimonial home is defined under S 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 S 28 of LRA-overriding interests and S 93(3) of
LRA. S93(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 property is
occupied as a matrimonial home. The bank should also make inquiries through the valuer. 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.

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. 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 recognized though not registered . 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?

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REMEDIES
Chargors right
toredeem

Notice

Lenders remedies

EQUITY OF REDEMPTION
Equitable doctrine that there should be no fetter or clog on the chargors equity of redemptionany provision which purports to limit, postpone or exclude the chargors equity of redemption is
prohibited. The right to redeem is absolute
S 89 LA Any law, written or unwritten that entitles the chargee to foreclose (bar) the equity of
redemption is prohibited (S72(1) RLA
Lord Parker in Krelinger V 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 lenders 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.
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. In Saleh V
Eljofry (1950)24 KLR it was held that the mortgagors equity of redemption was a necessary
incident of every mortgage and failure to repay on the CDR did not debar the mortgagor from his

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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. In
Industrial and Commercial Development Corporation V Kariuki&Ano(1977) KLR 52.- the
court stated that the right of redemption subsists until the transfer is registered.
Interfered with in two forms

That which make the land irredeemable

Collateral provisions in the nature of a fetter of a clog

Nookes V 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

CLOGGED/FETTERED
Examples

Postpone the right to redeem for 20years Fairclough V Swan Bakery Co. Ltd 1(1912) AC
565- it was held that this clause was invalid and the borrower had a right to redeem at an
earlier date

Mortgage conferred on mortgagee option to buy the property-This was held to be against
doctrine of equity of redemption- Samuel V Jarah Timber & Wood Paving Corporation
Ltd (1904)AC 323.

Clause which allowed mortgagor a limited period of redemption was void

NOTICE
Under S 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. 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 S 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 S s 90(1) LA the notice will run for 3 months. Notice should
require the Chargor to pay the money owing or perform and observe the agreement as the case
may be.

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Notice should inform the chargorS90(2) LA

The nature and extent of default

If default is non-payment of money, the amount that must be paid to rectify the
default and the time by which the payment in default must be completed (this should
not be less than 3 months)

If default consists of non-observance of covenants, what the chargor must do or not

do to rectify the default and the time for rectification should not be less than 2 months

A statement that is the default is not rectified within the time specified, the chargee
will exercise any of its remedies provided in the Act

The right of the chargor to apply to court for relief against those remedies

REMEDIES
Section 90(3) if the chargor does not comply within two months after service of notice, the
chargee may

Sue the chargor for money due and owing under the charge

Appoint a receiver of the income of the charged land

Lease the charged land, or if the charge is of a lease sublease the land

Enter into possession of the charged land

Sell the charged land

Reference to 2 months in s90 (3) is onerous since s 90(2) provides that the chargor should be
given at least 3 months within which to rectify the default. S90 (4) if land is community land
(Charge is only valid if done with concurrence of family), Chargee can appoint a receiver of
income of charged land or apply to court for order to lease, sublease or sell the land. S90(5) form
of Statutory Notice to be prescribed by the Cabinet Secretary in consultation with the
commission.

1. ACTION FOR MONEY

S91 LA- Chargee can sue for money secured if:

Chargor is personally bound to repay

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The security is rendered insufficient (not by chargee or chargors fault) and chargee
has given chargor opportunity to provide additional security

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

2. APPOINTMENT OF RECEIVER
S92 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 chargors 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
receivers costs are recouped from the assets of the chargor-not more that 5% of money received
S92(7) LA. See priority of payment of money received by receiver- S90(8) LA

3. LEASING
S93- follows the appointment of receiver

Lease can only be granted after 30 days upon expiry of notice

To take effect in possession not later than 6 months after its date

Reserve the best rent

Not more that 15 years or length on term of charge whichever is shorter

Contain reasonable terms and conditions having the interests of the chargor

Contain a declaration of appointment of receiver by chargee

4. POSSESSION
S94 upon expiry of notice, the chargee can serve notice to enter and take possession at least one
month after service of notice. Entry must be peaceful. Entry is achieved by taking the

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management of the property. 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.
5. CHARGEES POWER OF SALE
S96(1) LA where the chargor is in default of obligations under a charge and remains in default
upon the expiry of the demand under s 90(1) the chargee may exercise its power to sell. S 96 (2)
before exercising the power to sell the chargee must serve a notice to sell of at least 40 days.
Copy of notice to sell to be served on

Commission

Holder of the land out of which the lease has been granted if charged land is a
leasehold

Spouse of chargor

Co-owner of chargor

Any other chargee

Guarantor

Any other person with right to enter on and use the land or natural resources in it

Any other person to be prescribed by regulations

Required of service on all this people makes the process tedious and longer. In summary the
following notices must be served;
a) 3 months demand S 56(2) only if date of repayment is not provided or
demand is not made on the repayment date.
b) If default continues for at least 1 month serve 3 month notice under S 90(1)
LA
c) Forty days notice under S 96(2) LA
d) 45 days notice under the Auctioneers Act

POWER OF SALE- DUTIES OF CHARGEE

a) Duty of care owed to chargor, guarantor any chargee under subsequent charge- s 97(1) LA.
b) Chargee owes duty to chargor to obtain best price not more than 25% below market value
(sale may be declared void) S97 (3).

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c) Property must be valued prior to sale S97 (2) LA to determine its forced sale value - The
chargor may apply to court to declare sale void if sold at a value that doesnt meet this
threshold.
d) S99 LA confers protection on the purchaser if there has been irregularity in the sale, he can
claim damages against the person exercising the power.
e) sale to chargee upon court order
f) 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

POWER OF SALE CONDITIONS- S98

Sale

may cover the whole or part of the land

May be subject to or free of any charge or encumbrance having priority to the chargees
charge

By way of subdivision

By way of private contract at market value

By way of public auction-with reserve price

For a purchase price payable in one sum or by instalments

Subject to any other conditions of the chargee

There are therefore more ways in which the sale can be conducted.

RELIEF
S 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 s
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- s 102 LA. Court has power to reopen charges secured on a matrimonial home
S105(1) and 106(2) LA.

POWER TO RE-OPEN CHARGE SECURED UNDER MATRIMONIAL HOME

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Under S 105(1) LA Court has power to reopen charges secured on a matrimonial home in the
interest of doing justice between the parties. S106 LA Charges can be reopened in 3 instances,
on an application by:
a) Chargor or chargee to enforce a charge or commence an action under s 90
b) Chargor for relief against exercise of any remedy by chargee
c) Registrar where there is evidence of unfair dealing by chargee, or chargee is a
corporate body that discriminates against certain classes of chargorseg on
basis of gender.

RE-OPENING OF CHARGES
The court may:
1. Direct that the charge shall have effect subject to certain modifications
2. Require the chargee to repay the whole or part of the sum paid by the chargor
3. Require the chargee to compensate the chargor
4. Direct the chargee which is a corporate body to stop acting in a
discriminatory manner.

DISCHARGE OF CHARGE
Right to discharge in 2 forms:
i. S 85(1) , S 102 LA gives right to discharge- upon payment of all money secured by the
charge and performance of all obligations under the charge before the land has been
sold by chargee or receiver appointed. This right is in mandatory terms
ii. S 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 months
notice, shall pay not more than one months interest at the rate at which interest is
payable as well as all other monies secured by the charge

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 S 85(2).

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DISCHARGE
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
Chargors advocate prepares a discharge.

COMPANY SECURITIES
Securities given by companies sometimes differ from those given by individuals.
i.

Company charges are subjet to registration under the Companies Act-S 96

ii.

A company can create a floating charge over its assets so that it remains free
to deal with the asset until specified evets(eg 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. S88 of the Companies Act deals with debentures. Charges may be given by the
company to secure debentures

Fixed Charge
When made, immediately attaches or fixes on
the ascertained property. The right and ability
of the owner to continue to deal with it is
immediately encumbered

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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