Due Diligence when Acquiring a Land in Kenya

Due Diligence when Acquiring a Land in Kenya

Due diligence is the process of investigating and verifying all material facts relating to land before purchase. It is an essential step in any land transaction as it protects a buyer from fraud, defective titles, undisclosed encumbrances, ownership disputes and other risks.

In Kenya, due diligence is primarily guided by the Land Registration Act, 2012 and the Land Act, 2012.Before purchasing land, a buyer should first conduct an official search at the Land Registry or through the Ardhi Sasa platform.

An official search confirms;

  1. the registered owner of the property
  2. the parcel details
  3. tenure
  4. whether there are any encumbrances such as charges, cautions, restrictions, easement, court orders or pending disputes.

A physical inspection of the property is also important. The purchaser should verify;

  1. the location of the land
  2. approximate size and boundaries
  3. whether the property is occupied
  4. whether there are any encroachments or boundary disputes

Where necessary, a licensed surveyor may be engaged to verify the beacons and survey records.

The buyer should further verify the identity and legal capacity of the seller. If the seller is an individual, identification documents should be examined. Where the property is matrimonial property, spousal consent is required. If the seller is a company, the buyer should confirm that the sale has been authorized through a board resolution and the person executing the transfer has the authority to do so.

In addition, the buyer should confirm that all statutory obligations have been complied with, including payment of land rates and ground rent where applicable. Agricultural land requires consent from the Land Control Board before transfer.

The importance of due diligence has been strongly reaffirmed by the Supreme Court in Dina Management Limited v County Government of Mombasa & 5 Others (Petition 8 (E010) of 2021) [2023] KESC 30 (KLR). The Court held that a purchaser cannot rely solely on a certificate of title or the doctrine of a bona fide purchaser where the root of the title is defective. Instead, a purchaser is expected to conduct thorough due diligence and satisfy themselves that the title was lawfully acquired from its origin.

Upon satisfactory due diligence, the parties may proceed with the sale agreement, obtain the necessary consents, pay stamp duty, and register the transfer, after which a new title is issued in the buyer's name.

Conducting due diligence is therefore not merely a procedural step but a safeguard that ensures the buyer acquires a valid and legally protected interest in land.

Disclaimer

The information provided in this article is for general informational purposes only and does not constitute legal advice. Prior results do not guarantee a similar outcome. Reading or relying on the contents of this article does not create an advocate-client relationship with our firm. For advice regarding your specific situation, please contact us to obtain legal advice with respect to any particular legal matter.

By Ivy Ndirangu