PRE-CONTRACT PERIOD

AND INVESTIGATION OF
TITLE
Conveyancing
Lecture 3
E. Mulwa
 OBJECTIVES

• We shall examine the following:

1. The other professionals involved in conveyancing
2. The duties of an advocate in conveyancing
3. Investigation of title: searches
4. Inquiries and requisitions.
 PROFESSIONALS INVOLVED IN A CONVEYANCE
• Other than the buyer and the seller, there are other parties involved in a contract for sale of land. They
include the following:
1. Estate Agent
• Their role is to identify a party to a conveyance i.e. the Purchaser or Vendor or the Financier, at a
commission.
• Recognized under the Estate Agents Act (Cap 533) Laws of Kenya.
• Section 2(3) of the Estate Agents Act expressly exempts advocates from the provisions of the said Act.
• 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 For anyone to earn a commission as an
Estate Agent one must be registered under the said Estate Agents Act.
• Omollo J. A. in Rajdip Housing Development Company Limited vs. J. W. Wambugu t/a Wambugu&
Company Advocates C.A.C.A 4/1991.
• It is otherwise a positive transgression of the law to practice as an estate agent when one is not registered
• Mapis Investment (K) Limited vs. Kenya Railways Corporation C.A.C.A 14 of 2005
• and section 18 of cap 533
 Professionals cont
• 2. Land valuer
• · must be qualified under the Valuers Act- Cap 532. · value the property especially if the purchase is financed by a bank.
• 3. Planners (control of developments and subdivisions within local authorities)
• Planners must be registered under the Physical Planners Registration Act no.3 of 1996.
• 4. Architects
• · qualified under the Architects and Quantity Surveyors Act (Cap 525).
• · Create the architecture of the development
• 5. Quantity Surveyors
• They estimate the quantities and cost of the materials labour and time of the development.
• 6. Land Surveyors
• · must be qualified under the Survey Act (Cap 299).
• · determine boundaries and mapping.
• · useful when subdividing the property.
 Advocate’s Duties in a conveyance
• An Advocate undertaking a conveyance has the following obligations;
• a) Correspondence. An Advocate must carry out correspondences to enable him gather as much information on the conveyance as possible.
When acting for the seller or the vendor, you must obtain the following information.
• • Full names and addresses of the parties. The buyers advocate or agent.
• • Full particulars of the property being conveyed.
• • The purchase price.
• • Whether a deposit is being paid or has been paid.
• • Details on any encumbrances on the property.
• • Whether the property is vacant.
• • Expected date of completion.
• • Prepare the sale agreement.
• • Prepare title documents.
• • Approve the transfer or the conveyance.
• • Attest the execution of the transfer.
• • Receive and account for the proceeds of the sale to the client.
 Duties Cont

• When acting for the buyer an Advocate will require similar information but he must advise the client on the
following;
• • Finances.
• • Possible future liability for taxes.
• • Legal costs and expenses of the conveyance.
• • Carry out a search.
• • Scrutinize the documents.
• • Approve the sale agreement.
• • Prepare transfer or conveyance
• • Stamp and lodge the documents for registration.
• • Obtain and pay purchase price to the vendors Advocate.

• When acting for both parties an Advocate must refrain from acting for both where there is conflict of
interest or there is likely to be a conflict of interest.
 Duties cont
• Other duties will include;
• b) To obtain a rates clearance certificate
• c) To obtain a land rent certificate
• d) To obtain consent of commissioner for lands.
• e) To obtain land control board consent.
• f) To obtain county government’s consent.
• g) To obtain consent of trustees if the land is held in trust.
• h) To obtain consent of public cooperation authority.
• i) Obtain a discharge or a reconveyance.
• j) To pay stamp duty.
 INITIAL CLIENT INTERVIEW
• PURPOSE
• · gather all the relevant facts pertaining to the intended transaction
• · afford crucial advise to the client on transactions generally and the particular transactions specifically
• FIND OUT…
• a) Details of the parties - names, capacity, advise on co-ownership. SEE Barclays Bank
• PLC vs. Obrien (1994) 1AC 180, the House of Lords held as against the court of appeal,
• a wife who hasn‘t obtained independent legal advice any such mortgage will be void but only as against the
wife.
• Shah V Akiba Bank Limited (2005) 2 KLR.
• b) 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.
• c) Authorization to disclose details and information about related transactions: Cf.
• Mortgage Express Ltd vs. Bowerman& Partners 1996 2 All E R 836
• Held the advocate doesn‘t just protect the client but also 3rd parties for the sake of earning fees. You
shouldn‘t encourage such fraud just to earn your fees.
 INTIAL INTERVIEW CONT
• d) Details on pre contract enquiries ;
• · Especially acting for seller
• · you are bound to receive pre contract inquiries
• · are searches that inquire on the physical structure of the property
• · if it‘s the seller procure an evaluation report.
• e) 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.
• · The advocate must however not be involved in the negotiation of the sale price of the property.
• · get the written consent of both parties for an advocate acting for both the seller and the buyer
• · Acting for lender and borrower is generally permitted.
• · nature of the advice you offer the client must be independent.
 INITIAL INTERVIEW CONT
• f) Discussions on fees.-
• · Information on fees to be charged must be confirmed in writing at the start
• of the conveyancing transactions
• · agree on the advocates fees for the whole transaction
• · inform the client the right to increase the advocate's charges in case
• g) Discussions on financing and financial implications of the transaction
• deposits, stamp duty, undertakings
• h) Details on the title documents: Obtain copies of the title document to allow for
the title investigation.
 INVESTIGATION OF TITLE
• This is done to determine whether the ‘owner’ is the legitimate owner and whether what is being acquired is
a good marketable title.
• Reasons for investigation of title
• a) Buyer beware : 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.
• b) a bona fide Purchaser for value without notice acquires a good title to property unaffected by matters of
which he had no notice
• c) A conveyancer must exercise due diligence ; Failure to do so may result in a successful claim for
negligence.
• Investigation of title 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
• · it is expected that the devolution of interest in a property is best known to the vendor.
• · Vendor deduces the title by submitting an abstract of title; 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. Also called an epitome of title
 INVESTIGATION CONT
• 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
• · Company Registry-
• · Probate Registry
• · Local Authority
• · Survey Department to establish boundaries
• · Physical Inspection of the property
• · Court records
 PROCESS OF INVESTIGATION
• a) Searches
• A search is the purposeful inspection of the title records or register records at the relevant lands
registry with the primary purpose being to identify or detect an adverse entry on the title or the
register itself.
• 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.
• 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.
 Searches cont
• In Kenya, searches can be divided into official and unofficial searches. In all
searches, nominal fees are paid.
• Personal searches entail 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 searches constitute 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, 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.
 Searches cont
• Like registration, searches also shield against fraud.
• There are a variety of searches to be conducted but the modern conveyancer is more concerned with a search under
or at the Land Registry, Company Registry, and Survey Department etc. The search should be conducted at the relevant
land registry i.e. the registry where the property is registered.
• · carried out usually by the Purchaser ‘s or Chargee ‘s or Leasee‘s Advocate in the government departments
• · 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). purposeful inspection of title records or register at the
relevant (Lands) Registry.
• It also includes searches at the Companies Registry to confirm existence of the Vendor or solvency of such Vendor
• It also includes search at the Local Authority/County Government Registry to ascertain any planning hindrances
• Investigations of the County Government Registry 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.
• It also includes notices search at the Survey Department to reconfirm or identify boundaries.
 Searches cont
• SIGNIFICANCE OF SEARCHES
• Helps a conveyancer discover restrictive entries such as caveats, caution, prohibitions or
restrictions on title
• Discover any other encumbrances
• Discover whether the proposed vendor is the registered proprietor.
• check the state and condition of the property.
• check who is in Actual Occupation of the Property
• check boundaries
• check on rights and easements affecting or benefiting the properly.
• check fixtures and fittings contracted to be sold are in the subject property just prior to the
exchange
 Inquiries
• b) Pre Contract Inquiries
• · relate to matters touching on the physical condition of the property as well as other matters not covered by searches.
• · Are also medium of investigating the title or property
• · relate more to the physical condition of and location of the subject property
• · Purchaser will conduct a personal inspection of the property
• · The inspection is conducted to help ascertain ; the value of the property, detect physical and patent defects, ascertain
those in occupation.
• 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)
if any
• · 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.
• NB ; When acting for the Vendor it is important not to presume any answers to pre contract inquiries but to consult with
the client.Any misleading answers relied upon by the other party might lead to a cause of negligence.Gran Gelato
Limited –vs- Richcliff (Group) Ltd [1992] 1 All ER 865.
 Inquiries
• 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.
• 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 buyer’s advocate will also raise written enquiries about who is in occupation (e.g.
tenants.)
• 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.
• 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.
 Requisitions
• c) Requisitions
• · are in the form of forthright questions arising after a perusal and deduction of the title document.
• · 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.
• · Relate to ;
• tenure or the property
• execution of the title document,
• identity of and description of the property
• 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 Vendor is under an obligation to fully and correctly answer the
requisitions.
 NEXT WEEK:

• PRELIMINARIES OF REGISTRATION