Thursday, June 6, 2013

The easiest and legal way to buy land

PHOTO | FILE It is only through the right legal procedures that your right as a purchaser will be safeguarded.

PHOTO | FILE It is only through the right legal procedures that your right as a purchaser will be safeguarded.  NATION MEDIA GROUP

By ALLAN OLINGO

Buying land should not be such a hassle, especially when you go through the required legal processes. It is important to note that it is only through the right legal procedures that your right as a purchaser will be safeguarded.

Site visits and identification of beacons

The first step in purchasing land is to conduct a site visit. Other than knowing the physical location of the land, a site visit also helps one know the neighbourhood in terms of the social and economic infrastructure.

Conveyance advocate Muthoni Kamau says beacon identification gives the potential buyer a clearer vision of the shape and size of the land and its actual boundaries, as opposed to looking at what is on the deed plan.

Searches and inspection of title

It is important to visit the lands registry so as to conduct a search of the parcel in question. You will need a copy of the land title deed from the seller to facilitate the search.

She says: “It takes a maximum of three working days to get search results after filing a search application form and attaching a copy of the title. When buying land from a company, you need to do a company registry search at Sheria House, division of company registration, to ascertain that you are actually dealing with a duly incorporated company.

“This will also help you establish the directors and shareholders of the company selling the land,” Kamau explains.

Maxwel Githinji, an advocate, says that the search at the lands office, which should be done by the buyer’s advocate, will help the buyer ascertain the true ownership of the property, how genuine it is, establish whether the land actually exists, whether it is a road reserve, and establish the conditions and/or restrictions on the title.

“From the search, you will be able to establish the user of the title, verify the size of the land, and establish the history of a parcel of land. This is where you will understand how the land is and if there are any caveats, surcharges, or pending rates on it,” Githinji explains.

Preparation of offers and price negotiation

Once the buyer is satisfied with the search results as presented by their advocates from the lands registry and the company registry, then they will okay their advocate to prepare an offer.

Kamau says the advocate should prepare a letter of offer or intent showing the details of the seller and purchaser, the description of the property on offer, and the proposed purchase price and modes of payment.

“A letter of offer is usually in writing as it acts as the guide in preparing the sale agreement that follows. This document is important as it is used to reserve a property from being sold or offered to another party,” she says.

Sale agreement and deposit payment

A sale agreement is drafted once the seller and the buyer have accepted the terms of the offer. It is normally drafted by the seller’s advocate and presented to the buyer’s advocate for approval.

“It is important for the buyer to fully understand the terms of sale for the transaction. Their advocate should be able to clearly explain the clauses in the agreement and their implications. Once the terms are agreed upon between the parties, the advocates will facilitate and witness the execution of the sale agreement,” says Kamau.

Upon the execution of the sales agreement, the agreed deposit is paid by the purchaser through their advocate to the seller’s advocate’s account.

Moses Ogolla, a land selling agent in Kitengela, says this is the safest way to safeguard the buyer’s money and at no point should the buyer send money directly to the seller’s account.

“This is one of the loopholes that most con men use because they do not really want the advocates to handle the money. Using the advocate’s accounts should act as a check againt falling prey to con men,” says Ogolla.

Payment of land rates

Last year, the City Council of Nairobi “clamped houses” that had failed to remit rates.

Buyers should be aware of such property because the payment of rates on land is a legal obligation of land owners and the seller should clear any pending rates on the land before completing the transaction.

Kamau says the seller should produce a clearance certificate for the land before it can be transferred to the buyer.

Transfer documents and consent to transfer

The seller’s advocate prepares transfer documents that will be executed by both the buyer and the seller. The transfer documents will only be executed after consent to transfer has been issued by the commissioner of lands.

Valuation

For purposes of stamp duty, an application for valuation is always made to the government valuer, who makes a site visit to enable him or her to prepare the requisite valuation report. Stamp duty is important as it is used in registering the property.

The payable duty is determined by a government valuer and the valuation is done to determine the true value of the land on the open market as at the date of transfer.

The intention is to gauge the value declared in the instruments presented for registration for purposes of ascertaining whether the value declared in the instruments will be raised or not.

“It is the buyer’s responsibility to apply for the valuation of the land using the valuation form duly completed by the seller. The lands office will use these documents to determine the stamp duty payable,” says Kevin Tirop, a valuer.

Payment of Stamp Duty

It is the responsibility of the buyer to pay the stamp duty, a tax levied on all lands.

“It is important for people to know that the registration of any such transfer at the lands office cannot be effected until the stamp duty has been paid, embossment done, and the document accompanied by a receipt to prove such payment,” he says.

Registration of transfer

Once the registration process is complete, the legal ownership of the land shall have legally changed hands.

“To facilitate registration of transfer, the original title deed of the land, duly stamped transfer documents, original stamp duty assessment forms and receipt, stamp duty valuation report, original paid-up land rents receipts and clearance certificate, original land rates clearance certificate, consent to transfer, and application for registration are required,” says Kamau.

Exchange of documents

Upon receipt of the completion documents from the seller, the buyer is obligated, in exchange of the documents, to pay to the seller the entire balance against the land through his advocates to finalise the registration of the documents after paying the requisite stamp duty.

“The completion documents from the seller’s advocates include the original title deed of the land, the signed and witnessed transfer documents in favour of the buyer, the original paid-up land rents receipts and clearance certificate, the original land rates paid-up receipts and clearance certificate, and the consent to transfer,” Kamau explains.

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