In June 2017, the Ministry of Lands was grappling with 7,052 cases of property fraud. Prospective land buyers can significantly reduce this by conducting due diligence. Below is a check list of the things one needs to consider before purchasing property according to the Institution of Surveyors of Kenya and Username Investment Ltd.
1. Background research
Engage a real estate company that has a solid portfolio. This includes the number of projects they have completed and the title deeds issued. Look into project location, size and price. Be keen to identify any inconsistency in details. Look for testimonials and reviews from other investors.
This will give you first-hand information on what to expect in your investment journey with the vendor. If there is a clear indication of frustration do not commit your money to such an investment. When making a purchase, have copies of the company’s PIN certificate and Certificate of Incorporation.
2. Examine the property
Any potential investor should always make sure they physically visit the property that interests them. This is possible during property site visits and open days.
The visit will provide an opportunity for a potential investor to see the exact physical location, view the plots, the beacons, value additions such as the fence, gate, water, road networks and electricity connection. Avoid anyone selling you property that they are not willing to show you.
3. Title Deed Search
Details of every property are in the Ministry of Lands Registry. Conducting a title deed search is free. You simply visit the registry, fill in a search form, attach copies of your PIN, ID and a copy of the title deed you are conducting a search on.
This process takes 24 hours and will establish the landowners, whether they have rights to transfer property ownership to you and whether the title deed has a caveat placed for various reasons such a security for a loan.
4. Engage a lawyer and sign all legal documents
It is important to have a lawyer represent you when signing land purchase documents such as the letter of offer, sales agreement and the title transfer documents.
A sale agreement fully protects the rights and interests of the buyer and the seller because if one party fails to adhere to the contract the other party can take legal action. It also states the terms and conditions of the sale. A title transfer is the legal proof of transfer of the title deed.
5. Laws and regulations
National and county rules regulate the building, construction and development of real estate properties. Do these laws allow you to put up certain structures in future?
If you are buying agricultural land and intend to put up residential apartments, you will need to apply for a change of user approval. Real estate companies that provide legal advice in and around their projects are the best choice when it comes to land investment.
6. Confirm property boundaries
Buy land that has been thoroughly surveyed and demarcated. Know where your land starts and ends to prevent any confrontations. Have the exact measures and ensure it is well beaconed and the plot numbers are visible. Make sure your property is not on riparian land.
The Kenyan laws define riparian land as being a minimum of six metres and up to a maximum of 30 metres on either side of a river bank from the highest water mark. This land is public land and cannot be sold. A survey map will help you identify existence of any rivers next to your potential investment.
7. Familiarise yourself with the market
There are areas that everyone prefers purchasing land due to the high appreciation rates. When making a decision to invest in an area, ensure you gather all the information regarding upcoming investment opportunities in the area.
Compare the prices of land in the area of your interest because you may find different property companies offering the same size of properties in the same area but with different prices.
8. Government fees
There are various charges associated with land purchase such as payment of stamp duty and transfer fees. It is important to ensure you are aware of all the fees required to ensure you have a smooth purchase process.
Real estate companies that offer an all-inclusive price are better off as they will save you the stress of having to dig deeper into your pocket to pay off any unforeseen charges.
9. Physical location of the investment company
It is important to know the exact location of the real estate company you are investing with. This will eliminate the risk of purchasing a property from imposters who may be out to con you.
Identifying the exact location will make it easier for you to follow up the documentation process that will ultimately ensure legal adherence of the land purchase process. You will also get the opportunity to interact with the staff members of your investment company and get your questions answered.
10. Tenure of Land
A lawyer will help you know the tenancy of the property you are interested in purchasing. A free hold title deed gives you absolute ownership of land, while a leasehold title deed is owned for a specific period of time and requires renewal upon expiry, normally 99 years for non-Kenyan citizens.
For a leasehold title deed, make sure you receive Land Rates Clearance Certificate to ensure there are no pending land rates and if there are any pending land rates, ensure they are paid for by the seller.