CONVEYANCING TERMINOLOGY

As in all professions, words and phrases are used that are meaningless to a lay person,
particularly when an abbreviation is used. The following is a list of the most commonly
used terms and general requirements in conveyancing.

ALLOTMENT: An allocation of land by the Commissioner of Lands to a person by way

of a letter of allocation.

ASSENT: Describes the document under the terms of which an executor or administrator
vests title to a property in a beneficiary under the will or on the intestacy of a deceased.
Applicable to properties registered under the GLA, LTA & RTA.

ASSIGN: The act of transferring leasehold title.

ASSIGNMENT: Describes the transferring leasehold title under GLA and LTA.

ATTESTATION: To witness the execution of a Conveyance.

CHARGEE: Holder of a Charge.

CHARGOR: Person creating a Charge in favour of a Chargee.

CHARGE: Species of security that confers no interest in land but gives property charged
as security.

CONVEY: The act of transferring a freehold title.

CONVEYANCE: Describes the deed transferring a freehold title under GLA and LTA.

CONTROLLED TRANSACTION: A transaction falling under the Land Control Act

DEED: A document executed under seal.

DEMISE: A noun to describe a lease and as a verb to describe the act of leasing

DISPOSITION: Transfer of interest in land.

FEE SIMPLE: A freehold interest.

HEREDITAMENT: A parcel of freehold land.

LEASE: Interest in land for a fixed term or period.

LESSOR: Person giving a lease.

LICENSE: Permission granted to occupy ones land personally

PARCEL: A separately identified plot of land either by reason of its boundaries or it

nhaving a separate or distinct title.

MORTGAGEE: Holder of a Mortgage.

MORTGAGE: Disposition of interest in land as security for a debt.

MORTGAGOR: Person creating a Mortgage in favour of the Lender.

DISCHARGE: Release of security under RLA/RTA

RECONVEYANCE: Release of freehold mortgage under LTA/GLA

REASSIGNMENT: Release of leasehold mortgage under LTA/GLA

VENDOR (SELLER): Person selling or intending to sell or transfer land or lease.

PURCHASER (BUYER): Person buying land or lease.

TITLE DOCUMENTS
Title Deeds - Title Document under the GLA
Conveyance - Title Document under the GLA
Certificate of Ownership - Title Document under the LTA
Grant - Title Document under the RTA
Certificate of Title - Title Document under the RTA
Lease - Title Document under the RTA
Land Certificate - Title Document under the RLA
Certificate of Lease - Title Document under the RLA
Title Deed - Title Document under the RLA

CONVEYANCING

INTRODUCTION

- Conveyancing Rules

- Reforms

- Underlying Nature of Conveyancing

 Is it jurisdictional?
 Is it a private contract?
 The first theory is that it is a quasi-jurisdictional act. Section 23 of the Law of Contract
Act. The second theory is that it is a private act (contractual) and the state has no law
(right?) whatsoever to interfere.

Conveyancing is a hybrid of both contracts and jurisdiction. It has everything to do with

domestic law. There are mandatory rules that must be observed.

Conveyancing is the transfer of an interest in property. Abbey & Richards definition

– the process by which legal title to property is transferred. The word conveyancing
derives its meaning from this very definition. It is basically to convey. Documents used to
convey interest from one party to another.

Conveyancing is the voluntary transfer of interest in property. However, there are

instances where conveyances are compulsory. E.g where a chargee or mortgagee is
exercising its statutory power of sale, where by operation of the law, interest must be
transferred to another party.

Three critical elements of the definition:-

1. Process – All applications from the appointment of the estate agent to the time
you actually get a duly registered title.

2. Legal Title interest being transferred – What is transferred must be legal.

Qn: How do you ascertain legality of title in RLA documents?

3. Transfer – Voluntary transfer. You can also transfer title to yourself e.g if you
are a beneficiary of an estate. Also includes the modification of ownership e.g
in joint tenants.

Conveyancing is the art or science of conveying or effecting the transfer of property or

modifying interests in relation to the property by means of a written document.

Conveyancing is the only branch of law that takes from all other branches of the law. E.g
the law of contract – the sale agreement. Property Law and Land Law, Equity,
Commercial Law etc.

Defensive Conveyancing

This involves protecting the client, for instance, from negligence claims. Do not allow
your client to dictate you! Be on alert for any sort of fraud, for instance mortgage fraud.
Try to stop any criminal acts. Exercise caution.
In Momanyi v Hatimy & Anor [2003] KLR 545 the advocate was sued in negligence and
misrepresentation. The advocate had failed to conduct a search and advised the client
that the property was unencumbered. The client paid the purchase price. It later on turned
out that the property was actually encumbered and title could not be transferred. The
client filed a suit and sought summary judgment. The court struck out the advocates
defence and granted summary judgment. On appeal, the Court of Appeal stated that in a
claim for damages in negligence, any defendant who had denied negligence was entitled
to unconditionally defend the suit.

In the case of Juma Muchemi v Charles Waweru Gatonye T/A Waweru Gatonye & Co.
Advocates HCCC No. 853 of 2002, the advocate failed to conduct a search. The advocate
was sued and his defence was that “ In any event, you my client could not have been in a
position to complete this transaction because the plaintiff had failed to secure requisite
finances” Kasango J dismissed the suit. (!)

There are instances where interest in property will pass without formal methods of
conveyancing being followed. E.g.

(a) Adverse Possession

Statutes of Limitation dictates if a party is in possession of property continually for a

period of 12 years and such possession is adversely exercised with the intention of
excluding the whole world from claiming an interest to the property, the court is under a
duty to declare the party the owner of that property and that the judgment is a judgment
in rem.

(b) Proprietary Estoppel

If you represent to a party that the party can exercise such rights on your property to be
deemed an owner of the same and relying on your representation that party acts to his
detriment, the court is under a duty through the principle of proprietary estoppel to
declare the party as the owner of the property.

In the case of Teng Hwan v Swee Chuong [1992] 1 WLR 11, two brothers bought land
jointly in their names and registered them in their father‟s name as a trustee. The
defendant began construction on the plot 3 years later. The plaintiff encouraged him to
continue and consented to the construction. He also indicated that he would surrender his
interest to the property defendant in exchange for a plot that did not exist. The defendant
completed the construction and took full possession. When the father died, the plaintiff
moved the court and sought his share of the property or money in lieu thereof.
The defendant counter claimed for a declaration as the sole owner using the shield as
proprietary estoppel. The Privy Council held that the plaintiff was estopped from denying
the defendant title and ownership to the entire property even though the arrangement was
from the word go unenforceable, as there was no consideration.

(c) There are possibilities of conveyancing unregistered property through a special

power of attorney which you register. The power of attorney would states that “ In the
case City Council decides to give title, you have the power to get title to the property.

You can also transfer property based on a letter of allotment on conditions that:

- The property exists

- The allottee has satisfied the conditions in the allotment by making sure there
is a correspondence file for that piece of land in the land‟s registry.

THE HISTORY OF CONVEYANCING

Much of it is drawn from the English. In the case of Nyali Ltd v AG [1955] 1 All ER 646
Denning LJ stated that you can transplant an English Olive in Africa but you must never
expect it to thrive with the same foliage and green as it does somewhere in Manchester or
England.

We have borrowed heavily from the English but we are duty bound …

Up to 1535, the transfer of interest in land in England was by primitive method of

surrendering the property to the Lords and they in turn granted the property to your
nominee. There were no formalities and no records.

By 1535, the Lords‟ role was set out and consequently if there was to be a transfer, he
prepared a note or an assurance known as the foeffment stating that the transferor had
given up his right over the property to whoever wanted to secure the property. There was
no registration of the same. Delivery was accomplished by a ceremony known as delivery
of ceisine (?) of the property itself in the presence of all the feudal lords.

After 1535, the first statute relevant to conveyancing was enacted. Before this you could
partition property or swap property.

In 1535, the Statute of Uses was enacted by Henry the VIII. The purpose of this statute
was to mitigate and stall losses that the Crown was incurring because the feudal lords
decided they could also trade on the property.
Prior to 1535 the land would be owned by the Lords and produce owned by the state. The
Statute of Uses introduced the principle that any property owned was to be transferred “
unto the use of the transferee and subject to the right of the crown.” This ensured that any
transfer had to be drawn in a particular way.

In 1536, the Statute of Enrolment was enacted with the purpose of keeping the feudal
system. It endorsed the regulation that each conveyance had to be sealed by the Crown
and enrolled within six months with the Chief Lords.

In 1677, the Statute of Frauds was enacted. It required that all conveyancing documents
had to be by way of deed and in writing, sealed by the party transferring the property
before three or more credible witnesses. This has continued to date.

The Real Property Act 1845 and the Vendor & Purchasers Act of 1874 introduced the
regulation for the transfer of property by way of prescribed forms.

In 1925, the Law of Property Act (later the RLA in Kenya ) was enacted for the purpose
of simplifying conveyancing/transfer and dealings in land. It abolished particular forms
of conveyancing in land simple basic and straightforward forms introduced. It also
abolished various forms of interests and estates in land and kept only freehold and
leaseholds. All land was to be conveyed by way of grant.

In Kenya, we developed our conveyancing along the English model. Prior to 1901, the
Englishmen who were the only ones who could own land did everything.

1. In 1901, the Registration of Documents Act was enacted. It dictated that

(Section 4) any document transferring an interest in land had to be registered
within one month of transferring it. It did not grant any title to land and no forms
were prescribed.
2. The Land Titles Act 1908 – it was intended to apply to the coastal areas. It
produced the concept of adjudication. The natives at the coast had begun conflicts
over land and the adjudication process was meant to resolve conflicts and record
with the recorder of titles who the owner was.

3. The Government Lands Act of 1915 – it was meant to control the interior
hinterland. It introduced the deed plan - a document drawn by a qualified surveyor
for purposes of identifying each parcel of land. It also introduced a systematic
approach to registering ownership in land. If the government alienated land and
gave someone it would be by way of grant or indenture of lease and would be
registered.
 4. The Registration of Titles Act of 1920 (Cap 281) – It intended to get rid of the
previous Acts. It was based on the Torrens System and emphasized proper
systematic registration of title and proof of registration of title. It guaranteed
registered title & prescribed for the first time statutory forms to be used in
conveyancing. Title documents are a Certificate of Title or a Grant.

5. The Registered Lands Act (Cap 300) - it provided for mandatory statutory
forms to be used in conveyancing. It simplified conveyancing. Title documents
issued under RLA include a Certificate of Lease, a Title Deed and a Land
Certificate.

The RLA had clauses which made title indefeasible notwithstanding even proof of fraud
to protect colonialists who were remaining behind after independence.

LESSON 2
BASIC REQUIREMENTS IN CONVEYANCING
1. Documentation
This is the requirement of writing, which finds its origin in section 3 of the Law of
Contract Act. There are other semi formalities e.g execution of the document, b
attestation of the execution, verification of the execution process and other statutory
requirements.

Why is it that section 3 of the Law of Contract Act and section 97 of the Evidence
Act demand that a transaction relating to land must be in writing?

 To ensure certainty, as land is unique: therefore in case of disagreement, the

remedy of specific performance may be available.
 Land is very unique as a merchantable item, consequently it is important that any
fraudsters who may wish to get it quickly or fraudulently; the Statute of Frauds
1677 specifically provided that the requirement as to writing was to guard
against any fraudulent dealings.
 The formality as to writing performs a forensic function in providing simple yet
conclusive evidence of the fact of an agreement.
 Land besides its socio-economic effect and the ability to attract fraudsters and
rogues, also has a variety of uses reflected in the many different kinds of interest
that one particular piece of land could provide. E.g. Parcel A of land, which is a
freehold, could be leased and subsequently mortgaged. The mortgagee can
thereafter sell the same. The evidentiary function of writing is not the fact of
agreement but the content of the agreement. Therefore writing performs the useful
evidentiary function in encouraging precision and recording such precision for
posterity.
  It has also been stated that writing performs the protective function of giving the
proprietors of land an opportunity to think again before dealing with this very
unique item.

Qn: With our modern day strict rules of evidence do we still need the forensic function
against fraud in the LCA which was largely drawn from the statute of frauds of 1677?

The British revised the Law of Property Act in 1989 and we followed suit with the
amendment of the LCA in 1991 (coming into force in 2003?) – prior to then, one could
either enforce a contract if agreement was in writing or oral and part-performed – the
latter was removed and this hampers courts from exercising equity which treats as done
that which ought to be done.

Section 3 of the Law of Contract Act dictates:

1. That the agreement must be in writing;
2. That the agreement be signed by both parties;
3. The execution of the agreement must be independently witnessed.

NB// The agreement must be in one document but there is an allowance for cross-
reference e.g. there is often reference to the LSK Conditions for Sale 1989

2. Registration
This is the keeping of records of land transactions in a land register. What is kept is a
notification not only of the existence of a particular parcel of land but also of any other
interest, duties, liabilities touching on that particular parcel of land.

Registration serves the following purposes:

a) It enables simple dealings in land.
b) It enables the Government to keep track of the use and ownership of all
parcels of land. This is evident in the 2005 legal notices relating to RLA &
RTA land i.e. requirements as to PIN numbers, photographs etc. also to keep
track of taxes
c) Registration provides certainty and security of title to owners or registered
proprietors of any parcel of land. Because of such certainty, the user of such a
parcel of land is able to use it to acquire mortgage facilities, trade etc.
d) Registration simplifies dealings in land within the best framework of land law,
especially with RLA e.g. one can easily trace the root of title.
e) Registration vests in the registered proprietor, be he the first proprietor or a
subsequent proprietor following a transfer he gets an indefeasible title as
against the whole world including the government. Registration is effected or
done at the relevant land registry.
Note:
 If land is registered under the RLA the operative statute is the RLA.
 If registered under the RTA the operative statute is the ITPA.
 If it is registered under the GLA, or the RDA, the substantive law is the ITPA

For Procedure:
 RLA is governed by the RLA
 RTA is governed by the RTA
 GLA is governed by the GLA.

If land is registered under the RLA you will look for the register under the RLA created
by section 5 of the RLA. Section 5 of the RLA authorizes the Minister of Lands to create
Land District Registries.

NB// There is need to overhaul section 5 and give directions on how district registries
should be created as the current ones have been abused by incompetent staff.

Section 4 of the RTA provides for registries to be created by the President himself.
Therefore there are only 2 RTA registries i.e. at Nairobi and at Mombasa. There is a need
to get all parcels of land are registered under the RLA.

Section 93 of the GLA provides for the creation of a Government Lands Registry at
Nairobi. The GLA Registry is a creation of the statute. There are currently two GLA
registries i.e. at Nairobi and at Mombasa.

The RDA by virtue of section 4 provides for the registration of an intended interest in
land within 2 months. However it does not pass any interest despite registration. E.g.
Registration of a sale agreement.

There are two RDA registries i.e. The Principle Registry at Nairobi and the Registry at
Mombasa.

Qn. Identify the relevant registries under the different statutes.

How is Registration Effected?

Under the GLA, there are registers in the form of volumes and folios. The document that
one presents for registration is then endorsed with an official stamp applicable under
s.218 GLA and an entry is made under the relevant volume page and signed by the
Government Lands Registrar.
A photocopy of the document that has been registered is kept in a deed file. (Each
particular parcel of land has its own deed file). The deed file is relevant for the purposes
of tracing the root of title as it is presumed that the deed file has all the title records. The
deed file should list everything in its history from the original grant by the Monarch of
England

Under the RTA the actual registration is done in two documents:

1. The original title document
2. The duplicate title document.
The RTA followed the Torrens system from Australia and thus when a grant is registered
the duplicate was kept by the Government and the original by the proprietor of the land.
The duplicate that the government holds is what is called the Register under the RTA.
There is no register proper. The duplicate is kept in a deed file.

Any registration under the RTA will be prefixed with the initials I.R (Inland Registry -
Nairobi) or C.R (Coastal Registry – Mombasa).

Under the RLA, there is a slightly improvised system of registration. It is only under the
RLA that there is a proper register (the form is in the 1st Schedule of the Act).

Section 10 of the RLA dictates that each particular parcel of land must have its own
register. The RLA register has three sections:

1. The property section

This has details/information regarding the land itself e.g Kisumu Municipality/
Block32/… and the acreage, where situate etc.

2. The proprietorship section

It states the name and the personal details of the proprietor, whether a minor, a trustee

3. The encumbrance section

It contains the encumbrances or any rights affecting the parcel of land adversely e.g. a
charge, a caveat, or a caution.

The registration under the RLA is two fold in certain instances. The actual register is kept
in the District Land Registry. The register is either a green card or a white card in the
District Land Registry. When documents are registered entries are entered in the cards. It
is advisable upon registration to ask for a search to ensure that the registration has been
effected. The document may have been signed but entries not made. This is especially so
because there is no requirement under the RLA that entry be made in the copy of the title.
The Registrar keeps in the parcels file the document that has been registered. Unlike the
RTA and the GLA, under the RLA the Registrar keeps the original document. The owner
goes away with the duplicate. Note that the register is the mirror image of the parcels
files.

What is Registering?
Land will always belong to the government (hence the doctrine of bona vacantia). It is
not the land that is registered as this is done once the grant is issued. It is an interest, or
the liability of a duty that is registered. These interests include:

1. An Allodium
This is the highest interest in land after the land itself. This describes a situation where
real property is owned free and clear of any encumbrances including liens, taxes or
charges.

The Crown is prohibited from interfering with such land. This is found in some states like
Italy (the Vatican i.e. ecclesiastical states. Note that after the 9-11 terror attack, the US
enacted The US Patriots Act entitling the state to acquire any land. Therefore an allodium
no longer exists in the US.

2. The Fee Simple

This is a freehold parcel of land. Fee basically means land. Previously, one could only
acquire certain parcels of land under the feudal system and one could not bequeath land
to anyone but after LPA 1925 you could pass land to anyone. Thus fee simple was
introduced. It is found in Kenya. Anybody can own the land. The Government has some
restrictions, not only in the use of land but may also levy taxes on the parcel of land.

The land is owned without the Government interest interfering until there is nobody to
inherit. The doctrine of bona vacantia will apply and the land will revert to the state.

3. Leasehold
This is an interest for a specific term where the grantee and the lessee are given the
property to own and possess exclusively at a premium for the determined term. A
leasehold can create another leasehold (sub-lease) or the leasehold may also be created
from a freehold.

4. Interests of Third Parties as against registered proprietors.

These are either encumbrances and or servitudes.
Encumbrances are created by the registered proprietor in favour of a third party which
results in the registered proprietor‟s rights being limited e.g. A charge requires the
consent of the third party before transferring, inhibitions and restrictions are also
encumbrances.

Servitudes are not necessarily created by the registered proprietor on their own parcels of
land. They are created for the interest of third parties on others parcels of land e.g.
easements and restrictive covenants. Easements could be created by statute

See: Tulk v Moxhay [1843-1860] All ER pg 9

Read the following sections:
Section 57-59 of the LTA
Section 95, 99, 100, 101 of the GLA
Section 20, 34, 40, 41 of the RTA
Section 38, 47, 65, 85 of the RLA.

Tulk v. Moxhay
2 Phillips 774, 41 Eng. Rep. 1143
Court of Chancery, England, 1848

Tulk v. Moxhay
Court of Chancery, England, 1848
2 Phillips 774, 41 Eng. Rep. 1143

Per LORD COTTENHAM, LC: If an equity is attached to property by the owner, no one
purchasing with notice of that equity can stand in a different situation from that of the
party from whom he purchased.

(1848) CB 430 (HL). The owner of land in Leicester Square had convenanted with
neighbouring landowners to `keep the park uncovered with buildings'. At common law,
the covenant was enforceable only between the original parties to the covenant, just as a
contract would be. When the land was sold, the purchaser wished to build on it, despite
his knowledge of the covenant. It was held that it would be inequitable to allow him to do
so. This established that the burden of a covenant which was restrictive in nature (see
RestrictiveCovenant) could `run with the land', despite privity of contract. For the burden
to run, the covenant had to `touch and concern' the land, rather than being for the benefit
of a particular person, and it had to be intended that the covenant bind the land.
Note that this principle applies only if the covenants are restrictive, not positive, and this
is a matter of substance, not form, To `keep the park uncovered' sounds like a positive
obligation, but in substance it is a prohibition.

Prior to this case, for covenants to run, the original agreement had to be made by a
landlord and tenant at the time that they entered into the lease, that is, there had to be
privity of estate, also called "horizontal privity." The Court noted that if the agreement
had been a contract instead of a covenant, it would have been enforceable. Therefore, the
Court decided that the covenant was enforceable at equity, that is, when the plaintiff
seeks an injunction as opposed to damages. The case stands for the proposition that
horizontal privity (privity of estate) is not required for the burden of a covenant to run at
equity. In order for the burden to run, the covenant must satisfy certain requirements:
(1)It must "touch and concern" the land. (2)The original parties must have intended that
the burden run. (3)The party to be burdened must have had notice of the covenant. (4)
The party to be burdened must hold or acquire some interest in the property that the
original promissor held.

LESSON 3
Registration is what gives effect to conveyancing. Other effects of registration of title
or of a person as the proprietor of land under the GLA and the RLA include extinguishing
communal land ownership.

Under RLA section 143 gives the registered proprietor of land an indefeasible title
notwithstanding fraud or mistake such that even a forged conveyance…

Section 20 states that absolute ownership is subject to the provisions of the RLA. The
interest passes subject to the provisions of the Act. The interest is only subject to priority
rights.

Registration is done by filling in the appropriate forms and lodging them at the
appropriate registry. The registration lodged first takes priority over that lodged later in
time. Registration gives one an absolute interest subject to any registration lodged prior to
that registration. I.e. the doctrine of priority, documents are ranked according to the time
they were booked for registration. The interest is made subject to the existing
encumbrances.

In the case of overriding interests, although not registered, they are recognised. They are
all such encumbrances; rights interests and powers not entered in the register but subject
to which dispositions that are registered are to take effect. See: National Provincial Bank
Ltd v Hastings [1954] Ch 9.
Section 30 of the RLA provides for overriding interests. Customary law rights are
however problematic. It has been held that one‟s registered interest is subject to
customary rights.

See: Mbui v Mbui EA 2005 256 where the court of appeal stated that registration does
not extinguish customary law rights. In this case, the son who had been in occupation of
the land sued his father who was trying to stop him from transferring 2 parcels of land
registered in his father‟s name under the RLA. His case was dismissed but he continued
occupying the land. His father sought to evict him on the basis that his son had threatened
him. He also appealed on the basis of being the registered owner of an absolute and
indefeasible title. His son argued that he was entitled to the land as a birthright under
Kamba customary law.
The court held in dismissing the appeal that the father‟s right although absolute was still
subject to the rights and encumbrances noted in the register. It also held that such right
was subject to overriding interests, which included customary law rights giving rise to a
trust that arose from the son‟s continued occupation of the land.

See also: Ogongo v Ogongo CA No. 29/2003 and Muthui v Muthui.

It is important to find out if there are any overriding interests existing under customary
law when conveying land. This may involve a physical examination of the property to see
who may be living on it. You could also obtain an indemnity from the seller guaranteeing
that there are no overriding interests. This could be included in the sale agreement. Note
that the issue of overriding interests has not been tested against the rights of a mortgagee
or chargee.

See: Barclays Bank v O’Brien which held that in mortgages, if the wife does not obtain
independent legal advice, then an issue as to the validity of the mortgage arises. She can
lay claim to the property.

Note that if you are able to show that you have an interest in property as a wife, the courts
may treat you favourably. See: Kivuitu v Kivuitu and Echaria v Echaria [2007]

Question: In light of the provisions of sections 32 and 33 of the RLA, is it correct to state
that it is only registration that gives one ownership rights in land?

Registration of property by way of grant or title has the effect of bringing land under a
particular substantive law. The law applicable depends on the applicable land regime
under which the property falls. GLA, LTA and RTA have their own procedural law but
rely on the ITPA for the substantive law. For the RLA land, the applicable procedural and
substantive law is the RLA. This is also important in determining which instruments to
draw.

Note that section 163 of the RLA excludes customary law rights and or other rights
accruing under customary law. See also section 164 on mortgages and charges.

Registration has the effect that any document registered under any regime constitutes
conclusive evidence of the interest availed or passed by that instrument unless it is proved
otherwise in a court. The fact of registration speaks for itself.

The Effect of Non-registration

1. No passing of interest.
2. Non-registration of particular documents, which ought to be registered by
statute as a matter of course or compulsory requirement, makes such a
document invalid. See: Section 32 and 40 RLA on the compulsory
registration of leases for more than 2 years. The document is not void but is
invalid i.e. it works as between the two parties (interpartes) but not 3rd parties.

The proprietor‟s rights in rem remain unsecured if there is no registration. This would
apply to charges.
See: Merali v Parker [1956] KLR 26
Clerk v Sombi [1963] EA 107

In the case of Rogan Kamper v Grovenor [1977] KLR 123 where Grovenor attempted to
rely on a clause on a draft registered lease. Rogan Kamper said since it was not registered
it was not applicable. It was held the unregistered lease operated as a lease inter partes
but not against a 3rd party. Therefore specific performance was ordered.

Both the RTA and the RLA were amended and section 38 of the RLA states expressly
that any transaction executed by both parties will not be void but operate as a contract
inter-parties. Section 32 of the RTA also makes it statutory right for unregistered
instruments to confer some rights as between the parties.

How & When is Registration Effected

Under the RTA, there is no time limit. Under the RLA, registration should be done two
months from the date on the document if done later than that you pay a penalty of Kshs.
250 per quarter.

Registration is effected by filling out the necessary documents required to be presented

for registration and presenting the document to the relevant land registry. Registration
takes effect from the time you book the document and therefore you must identify the
applicable law as well as in the land registry to beat the doctrine of priority. Do it in the
correct registry. RLA registries are in every district.

If it were a conveyance by a company, it would also have to register the instrument at the
company registry. Section 96 of the Company’s Act states that the registration of the
property is complete when it is registered at the company‟s registry. This was to guard
against fraud, insolvencies etc. The same applies for charges and mortgages.

For co-operative societies, lodge the charge or mortgage with the Registrar of Societies.

Question: Is the Torrens System still relevant as it was intended to be especially in view
of the overriding interests, encumbrances etc?
1. It may not be as accurate as there are instances of double titles being issued
2. There is the issue of overriding interests which are superior to those of the
registered proprietor
3. The documentation under RLA and RTA is cheap and simple as compared to the
Deed system
The RLA and the RTA apply the Torrens System.

Question: On a proper construction of section 32 and 38 of the RLA and RTA rights
concerning land have no proprietary quality unless registered. True or false?

BASIC PROTOCOLS OF CONVEYANCING

1. Period before Conveyancing & Formation of the Contract
There are usually two parties in a conveyance transaction. However there is also a 3 rd
party called a broker or estate agent who acts as an intermediary between the parties.
Estate agents are recognised by statute and are known to legally deal in conveyancing
transactions.

Cap 533 expressly provides for their availability and regulation. They participate in the
negotiations at a commission. Their role is to identify parties to a conveyance. They
should never take up the advocates‟ role. They should not draw the conveyance or hold
the deposit or carry out the search.

You need to ensure that the estate agents you are dealing with is registered mainly
because if something happens the client will come to you and you could be sued for
negligence.

With regard to deposits ensure that you hold it but if the estate agent holds it you must
ensure that he is registered. Chapter 533 provides for how much fees an estate agent is
entitled to as commission. If he wants more you must advice your client accordingly for
example the estate agent may be given the option to purchase the property.

Try to avoid getting involved with the estate agent because you end up negotiating the
terms, which is not your work. If you are the broker your duty would only be to source
the buyer and leave the parties to negotiate.

As an advocate and a conveyancer one can also be recognised as a broker and is entitled
to earn his commission when he brokers a deal i.e. sourcing a buyer. See: Article 27 and
30 of the Advocates Remuneration Order. This has been brought to doubt by the CA in
Wacira Wambugu v Rajeep Housing Development when it stated that CAP 533 is very
specific as to who can be a broker.

In Mapis Investments Ltd v Kenya Railways Corporation CA 14/2005 the court was
very clear that it is only a registered estate agent who can earn a commission

1. What happens when an estate agent misappropriates the deposit (if unregistered,
the contract cannot be enforced???)
2. If a registered estate agent, does one hold the money deposited as a stakeholder
or as an agent?
3. How much is the Estate Agent entitled to under the Act? If the estate agent wants
to charge excess, can he be given the option to buy??
4. Do not enter into the realm of the estate agent. Do not negotiate the terms of the
contract and vice versa

2. The Initial Client Interview

The purpose of this initial interview is to source for information and get proper
instructions. Allow the client to talk and listen to them.

The information needed includes:

 Details of the parties i.e particulars like names, addresses, telephone
 The property; who owns it, is it jointly owned, are they joint buyers etc. Give
proper advice in a situation of joint proprietorship and ownership in common
including the effects of this. Tell your clients about the interest held .i.e if it is a
leasehold, the residue of the term left and the probability of extension etc. Also
give proper advice if land is owned by both a wife and a husband, e.g on rights of
survivorship etc.
 Details of the proposed conveyance. i.e. the plot itself, the fixtures and fittings, if
they too are being bought.
  Discuss the possibility of there being a conflict of interest, for instance if you are
acting for both parties. Clients must agree to waive their right to representation? If
a dispute arises.

LESSON 4

In conveyancing it is never advisable to act for both parties. You ought to discuss
with the client whether you are authorized to disclose details and information about the
transaction itself and related details e.g. existence of a mortgage or source of finance to a
third party.

One may need to disclose in order to expedite the transaction. Authority should be sought
prior to this disclosure. One may disclose information that is beneficial to the other party
and detrimental to your client e.g. property costs one million yet the borrower borrows
two million. Disclosure in this case may lead to the advances being cancelled. See
Mortgage Express Ltd v Bowerman and Partners (1996) 2 All ER 836
If you are acting in a conveyancing transaction and you come upon information that may
jeopardize one party, then as an advocate you are under an obligation to disclose such
information. An advocate acted for both the lender and borrower in a mortgage
transaction. He became aware that the borrower was buying the property from a party
who was acquiring simultaneously with selling it but at a significantly reduced price. The
borrower defaulted and upon foreclosure, fetched a very low price. The bank sued the
advocate for negligence and breach of duty. The advocate was held liable. Sir Thomas
stated as follows:
“Where a solicitor acting for a purchaser and lender receives information
common to both. The question whether he should pass it to one of the
clients or other or both or neither, depends on the relevant interest of each
client which the solicitor engaged to serve.”

Note: An advocate should not take the role of an investigator.

At the initial client interview, you also want to take details regarding the financial
implications of the conveyancing transaction e.g.
- if a sale transaction, whether the client has the 10% or whether he can get it
within the period stipulated
- whether your client is obtaining a mortgage to finance the purchase
- stamp duty payable
- an advocate must always discuss his legal fees at the initial client interview. It is
advisable to discuss this last after setting or advising the client
- an advocate must ask for a copy of the title documents at the initial client
interview
 - you may also discuss any other miscellaneous issues
- follow up the interview with a letter confirming the instructions as well as the
details of the interview. One must also confirm fees but at an approximate value

INVESTIGATION OF TITLE
Without a good title there will be no conveyance. Why do we investigate title?
1. Prudence demands that you investigate anything that you want to acquire. By
investigating title, it gives you an insight of the property you intend to buy or take
as security
2. All land principles have the principle of a bona fide purchaser for value without
notice who acquires a good title. If you investigate title it will inform you whether
there are any encumbrances hence bona fide or not.
3. The caveat emptor principle demands that the buyer is responsible for checking
the quality as well as the suitability of the property he intends to acquire.
4. Investigation of title is not only confined to the registry or title deed alone but also
extends to the physical structure of the property e.g. merchantable quality

NOTE: The caveat emptor principle has its own exceptions. Latent defects for instance
must be disclosed by the seller. These are defects which though existing are not manifest
or active or developed and would not be revealed upon reasonable inspection e.g. dry rot,
crack covered by paint. Patent defects are visible and stand out. Adverse planning
decisions, unregistered encumbrances etc are latent defects

When do you investigate title or property

Ideally it is appropriate to do this before the contract is exchanged or executed so that you
are in position to make the decision whether or not to proceed with the transaction.
Conveyancing practice over the years allows parties to investigate title/property even
after the contract is executed. The law of contract allows one to rescind the contract if a
latent defect is discovered.

Mediums of investigation of title/property

1. Search on the title itself
2. Pre-contract enquiries/ preliminary enquiries
3. Inspection of the title coupled with requisitions

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. 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, Survey Department etc. The search should be conducted at the relevant land
registry i.e. the registry where the property is registered e.g.
GLA – Nairobi or Mombasa
RLA – The District Land Registry itself.
There are two types of searches:

a) Official Search/Postal Search

This is where the registrar does the inspection of the register or search upon one‟s written
request in the prescribed form. The registrar subsequently issues a certificate of official
search.
NOTE: It is only under the RLA that one gets a certificate. Under the GLA, RTA one is
issued with a certified copy of the title document ( a photocopy of the counterpart of the
title as contained in the register).

b) Personal/Unofficial Search
Here one undertakes the inspection of the title records or register by oneself upon request
via prescribed form. You inspect and peruse the title records or register oneself.

All systems of registration recognise these two modes of searching.

LTA – S.31; GLA – S.127; RTA – S.79; RLA – S.36; RDA – S.39*
(*no register of documents as no interest is passing)

In October 2005, the Commissioner of Lands and Chief Lands Registrar abolished
personal searches as documents were disappearing. This decree was issued
notwithstanding statutory provisions. The other reason was that documents were being
mutilated. This was ultra vires. This year, the LSK complained and the Commissioner
said personal searches may be conducted by lawyers only.

If you personally peruse a file, you are able to get so much information, such as the root
of title etc

Under the RLA, the official search has its own advantage. S.144 of the RLA provides
indemnity where one relies on an official search to his detriment as long as one is not a
party to any such fraud or defect. The equivalent section does not exist under the RTA
and GLA.

S.43 of the RLA (sterility provision) states that if you apply for an official search with the
intention of transacting and with the authority of the registered proprietor, no registration
can take place for 14 days from applying for the search. There is a stay of 14 days, the
title becomes sterile, and no registration can occur.
NOTE: There is a mischief however where one authorizes successive searches, the title
may be sterile indefinitely

A personal search enables one trace the root of title. In carrying out a search, one looks
for:
1. Issues regarding ownership
2. Issues regarding tenure/interest of property
3. Special conditions imposed on the property especially a leasehold
4. The user, whether commercial, residential etc
5. The existence of any adverse entries e.g. encumbrances on the title, cautions in
the case of RLA and caveats in the case of the RTA

There are however disadvantages relating to both searches e.g.

(a) Missing deed files – coz of overreliance on the manual records
(b) The information that one requires even if the deed file is available, may
not be there e.g. whether the land is public land that should not be
allocated
NOTE: The Lands Registry always has two files relating to a parcel of land i.e. deed file
and correspondence file

c) The Historical Search

This has been prompted in modern day conveyancing by the “Ndungu Report of 2004
into Illegal Allocation of Land”. For one to have access to the correspondence file one
needs to write a letter to the Land Registry and access is granted. Correspondence arises
from the history of the land i.e. when it was registered, subdivided etc

See: Gitwany Investment Ltd v Taj Mal Ltd & 2 Ors HCCC 114 of 2004
(Unreported)
Lenaola J. relied greatly on the correspondence file in making a finding on who was the
rightful owner of the land. The case involved double allocation of land. There are two
confusing aspects as Lenaola talked about RLA when the land was registered under RTA.
There were two deed files yet there was only one correspondence file.

Skyviews Properties Ltd v The AG & 2 Ors HCCC 1622 of 2001 (Unreported)
Ojwang‟ J. relied a great deal on the correspondence file to determine the issues raised.

Once you are through with the search you should inform your client of any adverse entry.
You should then clarify with the other side whether the transaction can proceed or not.
You should satisfy yourself that whatever adverse impacts/entries revealed will not
adversely affect your client e.g. if there is a mortgage, whether the sale price will clear
the mortgage in full.
Other Searches
1. Companies registry
2. Survey Departments
3. Local Authority – discloses zoning/development policies of land. Urban planners
and surveyors can carry out these searches. This is especially important when you
know what use is to be made of the land

A search at the companies registry will reveal whether the company still exists, whether
there are insolvency proceedings etc

A local authority search will reveal any adverse proposals e.g. advice to the Government
of compulsorily acquiring land for public purposes

CHALLENGES IN SEARCHES
1) Unavailability of deed files or “missing titles”
2) Mutilation and destruction of files and documents in the files
3) Delays with regard to search results. You need about seven clear working days
before you get them
4) Unavailability of Land Registers to sign your searches i.e. lack of efficiency and
skilled manpower at the Land Registries
5) Slow pace of computerisation

Significance of Searches
1) Failure to carry out a search may lead to the failure to register a document e.g.
because of the existence of encumbrances
2) The vendor may turn out not to be the owner of the property. This can be
discovered by a search
3) The title document may be a forgery
4) The above errors occasioned because of omitting to carry out search may lead to
negligence suits against you

Letters of Allotment
This come from the Government through either the Commissioner of Lands or the Local
Council if it is Council Property. It is risky to deal with a letter of allotment e.g.
1. Most have stringent conditions which if not complied with within the stipulated
time automatically revokes the letter of allotment
2. One may carry out a historical search on land being allotted on the general file i.e.
zone file and correspondence file etc. in carrying out a search on the basis of a
letter of allotment look out for planning conducted e.g. by the Local authority.
 Look for the Part Development File (PDF) which should be properly prepared and
signed by the Chief Physical Planner and Commissioners of Land
NOTE: The CA has held that unless a letter of allotment is registered it is not recognised.

A search at the Survey Department involves a consideration of the boundaries.

LESSON 5
B. PRE-CONTRACT ENQUIRIES/ PRELIMINARY ENQUIRIES
These are those enquiries made to the seller or he who is parting with an interest with the
intention of seeking or eliciting information not covered by the searches and information
touching on the physical stature of the property.

When posing the contract questions ask relevant questions. Ask questions for instance
about the tenants or occupants in the premises, the terms of their occupation or tenancy,
enquire about any physical defect touching on the property which the vendor may be
aware of but on the face of inspection of the property is not easily detected.

Ask about the developing prospects of the neighbouring properties. Whether there has
been any boundary changes in the last few years. The vendor is under no duty to reply but
if they reply, it must be accurately i.e. a reply one can rely on. Therefore, as a
conveyancer do not give anticipatory or stereotype answers.

If one gives inaccurate answers, the recipient who relies on them can claim damages and
if the contract is already signed, one may rescind the contract. The recipient has a right to
sue in tort for negligent misrepresentation where the answers are inaccurate. The UK
have a Misrepresentation Act but there is no such equivalent in Kenya. In Kenya,
however, it has been held that proximity and foreseeability can be extended to contract.

Capano Industries Case: Extended the doctrine of proximity and foreseeability to where
it is just and reasonable for one to be held liable even where the duty is owed.

An advocate should not step into the shoes of his client and give answers on his behalf
unless authorized. See: Gran Gilato v Wycliffe … Ltd & Others
The plaintiff paid £30,000 for an under-lease for 10 years. He thereafter spent £100,000
renovating and shop-fitting the premises to manufacture and sell ice-cream. The head
lease contained a break clause if there was a requirement for re-development by the head
lessor. The break clause required a 12 month notice.

Before the grant of the under lease the plaintiff‟s advocate sent to the second defendant
(advocate for the first defendant) inquiries before lease i.e. precontract inquiries and
sought to know if there were any rights affecting the superior leasehold title which would
inhibit the enjoyment of the premises by the plaintiff in accordance with the draft sub-
lease. The advocate replied that there was nothing of the kind to the best of the lessors
knowledge. Five years after the service commenced, the break clause in the head lease
was exercised. The plaintiff claimed damages against the head lessor and the advocate for
negligent misrepresentation in view of the inaccurate answer at pre-contract inquiries.

It was held in the course of a normal conveyancing transaction, the seller‟s advocate did
not owe the buyer a duty of care when answering enquiries before contract because a
buyer has a remedy against the seller for misrepresentation. However, if the advocate
took steps out of his role as an advocate and accepts responsibility towards a third party
then he owed independent duty.

Precontract inquiries unlike searches (investigation of title)

1. Touch on the physical stature of the property
2. Fetch information that would not ordinarily be available through an official or
personal search

C. REQUISITIONS
These are such queries or objections to the title which come as a result of one‟s
inspection of the title document qua title documents. Things to look out for are:
- Whether the document has been properly executed and witnessed e.g. if a
company as opposed to an individual (common seal in the presence of two
directors, whether there is a proper power of attorney in place)
- Whether the proper stamp duty on the document was paid
- Whether there are any particular encumbrances or adverse interests
enforced in the title e.g. Grants always have conditions and or limitations

It is upon investigation of title documents that requisitions are sent out. Requisitions are
often directed at the vendor or seller. Ordinarily, requisitions are sent before contract is
executed. However, there is no harm in sending the same after the contract has been
executed. This authority is given by the LSK Conditions of Sale, Condition No.10
NOTE: Good practice dictates that requisitions be sent out before execution

Example:
b) Is the signature the proper signature of the executor?
c) If execution is by a company, ask for the mode of execution of the company and
a copy of the Memorandum and Articles of Association. If a foreign company,
and the MEMARTS are in a different language ask for a legal opinion
d) Ask about the identity of the property
NOTE: There is no format for requisitions
An answer to a requisition just as in pre-contract enquiries if it turns out to be inaccurate,
the recipient will be entitled to rescind the agreement, or if damage caused is not so
substantial, he may proceed with the agreement and seek remedies in damages.

Requisitions are also very important when you are acting for lenders i.e. mortgagees or
chargees having to exercise the statutory power of sale. If there is a defect in the title
document, one can go to court and say the title was defective therefore property cannot be
sold.

Upon receipt of requisitions, an advocate should consult with his client however, unlike
pre-contract inquiries, one is under a duty to advice his client. Do not give stereotype
answers.

PRELIMINARIES IN CONVEYANCING
These include:
- Execution and attestation of documents
- Verification of signatures of the persons executing the documents
- Payment of stamp duty
- Obtaining clearance certificates
- Obtaining the requisite consents
- Registration

Execution and Attestation

With regard to conveyancing documents, execution is the signing of documents the
purpose of which is to authenticate the same. A signature means the writing or otherwise
affixation of a mark or name by oneself or by such person as has been authorized by him
with a view and intention of authenticating a document as being made by such person as
is placing the mark.
NOTE: The typing of a name or a signature is not a name. One must be able to write it.
Initials would amount to a signature. See:
Firstpost Homes Ltd v Johnson [1995] 4 All ER 355
It was held that the typing of a name is not a signature as per s.2 of the Law of Property
Act (like s.3 of the Law of Contract Act) In Kenya s.3 of the Law of Contract Act
requires that a contract be signed by the parties or authorized persons (power of attorney
must be there for this authority to be genuine)

The MEMARTS may dictate whether the seal alone is enough execution or if a director
must also sign. A problem will arise under the RTA which requires at s.59 that he seal
must be witnessed by two directors.
Q: Under s.3 of the LCA should the person seeking to enforce be the only one to sign?
Yes, it limits execution i.e. agents not allowed.

S.109 RLA dictates that for an interest to pass, both parties must sign the document
unless the registrar decides to exempt one party. The RTA does not have a mandatory
provision for both parties to sign the document. It is only the person disposing the
interest. However, in light of s.3 of LCA both parties must sign the conveyance.

NOTE: In exam, make sure both parties sign.

Also, the contract is a covenant and one needs to be party to it to be bound.

Attestation
This is the witnessing of the execution. Attestation should occur when one sees the fact of
signing. Under both RTA and RLA. RTA s.58 states who ought to attest documents i.e.
Judges/advocates if in Kenya; notary public if in the commonwealth; mayor or chief of
city in which document has been executed (commonwealth); consular general

In the RLA, there is the requirement of verification under s.110 which requires that the
signatory to the document appears before the registrar or before the person attesting the
signature.

NOTE: In view of LN No.146-153 of 2005, the LTA, GLA and RTA requires the
availability of one‟s PIN No. , Identification documents (passport or ID) and passport
size photograph of the person signing. This in effect is to bring in verification
(impliedly). This was aimed at circumventing the fraud at the Lands Registry.

Stamp Duty
This is basically a form of revenue collection by the Government by selling either
revenue stamps or the dye (red), the Government is able to raise revenue. Stamp duty is
provided for under the Stamp Duty Act (Cap. 480)

Under s.5 of Cap 480, every instrument relating to property in Kenya, if it is provided for
that stamp duty be paid in the Schedule to that Act, will be assessed and the required duty
must be paid as a legal requirement. See 1st Schedule to the Act for instruments in
conveyancing that will fetch stamp duty. S.6 of the Act says that duty must be paid within
30 days of execution of the instrument or if executed outside Kenya, within 30 days of
receipt in Kenya. Failure to pay duty means an offence has been committed. However,
the Government instead of exercising the Penal aspect of the Act will levy a prescribed
penalty. See: ss.26 & 113 SDA, S.20 also has penalty for late payment
S.111 of RLA states that no document will be accepted for registration unless the
required duty has been properly paid. The amount payable is dictated by the Minister of
Finance and is usually stated in the Budget. The duty is assessed on the instrument if it is
a transfer on the basis of the value of the property i.e. ad valorem duty
- Within municipalities and cities – 4% (urban land)
- Outside municipalities and cities – 2% (agricultural land)

For leases it is based on the annual rent for which the property is leased. Therefore you
may need to present the documents to the Office of the Director of Stamp Duty who
assesses the stamp duty payable i.e. the lease is examined for assessment.

Stamp duty is paid directly by way of Banker‟s cheque to designated Banks. You fill in a
Stamp Duty Declaration Form.

Mortgages attract 0.2% duty of the amount being borrowed and for discharges 0.05% of
the amount borrowed.

The value relates to the property itself and not the fixtures and fittings. Fixtures and
fittings ought not be included. However, the requirement that no property will be
registered unless the value is declared by the Chief Government Valuer has led to fixtures
and fittings being included.

S.95 & 96 of the Stamp Duty Act. On adjudication and exemption of stamp duty where
there is a restructuring of sister companies therefore they only pay nominal duty
S.106 deals with exemption from payment of stamp duty by the Minister of Lands

What is the purpose of the SDA if it stagnates conveyancing? This therefore raises the
need for reform e.g.
1. Exempting stamp duty in the purchase of first houses
2. Family companies being exempted from duty (it was done in 2007)

CLEARANCES
There are two types of clearances in conveyancing i.e.
b) The Rates Clearance Certificates
c) The Rent Clearance Certificate

Rates Clearance Certificates

Rates are ordinarily payable to the Government through the Local Authorities, wherein
the property is situate, save for the very initial stages of registration of land. The Rating
Act provides for payment of rates as a form of tax of all property within the Local
Authority. S.86 RLA provides that prior to registration or acceptance of registration of
any instrument intended to transfer or vest an interest in land on any persZZon other than
the registered proprietor shall only be accepted for registration when the Lands Registrar
is satisfied that all outstanding rates and all other charges to the Local Authority have
been paid in full.

It is issued by Local authorities for charges for water bills, sewerage etc when paid

Other charges to the L.A. would include water and if a leasehold, the Local authority may
insist on rates. A rates clearance certificate is the document that will satisfy the registrar
that all rates have been paid. The certificate must be valid as at the date of registration.
S.33 (2) RTA has an equivalent requirement of a rates clearance certificate.

One applies to the Town Clerk for Land Rates Clearance Certificate.

Rent Clearance Certificate

Applicable only to properties which are leaseholds. S.86(a) of the RLA and S.33(3) of the
RTA both provide that before a document is accepted for registration, the Land Registrar
or Registrar of Titles (RTA) must satisfy himself that all land rent due to the Government
under leasehold tenure has been paid by producing the Rent Clearance Certificate. This is
usually issued by the Commissioner of Lands and on behalf of the Central Government
after payment of all rent due and any applicable taxes.

Previously payment was made to the Commissioner of Lands but from 2006, Land rent is
payable to KRA (Comm., of Domestic Taxes) but the Comm., of Lands issues the
certificate. This has led to delay as the KRA has to confirm outstanding amounts from the
Lands office. It applies to all documents/transactions as long as the property is leasehold.

CONSENTS
This depends on:
a) Where the property is situated
b) The tenure or estate one is dealing with

The Commissioner of Lands Consent

Applies in the case of all leaseholds from the Government e.g. for transfers etc. It does
not matter where the property is situated. The consent will be issued when the
Commissioner of Lands is satisfied that all the conditions, covenants, provisions given by
the Government have been complied with. This consent was intended to ensure that
planning by local authority is followed to the letter but this has been limited to payment
of rates.

Consent by the Local Land Control Board

This applies to all property situate within agricultural districts. These are defined in s.2 of
the Land Control Act as “any land not within a township or municipality or within
Nairobi but is declared to be agricultural land.”

Any transaction in respect of agricultural land must obtain the consent of the LCB. This
requirement is set out in s.6 of LCA. The original purpose was to control the user and
conveyancing of agricultural land e.g. to avoid constant subdivision, avoid ownership by
foreigners or companies where the majority shareholding is by foreigners.
NOTE: The LCA provides that even dealings with shares in a company that owns
agricultural land ought to be sanctioned by the LCB
- In the case of a transaction where you are inheriting the property, you don‟t need to
appear before the LCB

The form used to apply for consent is Form 1 of the Schedule. The consent is issued by
the LCB which is established to cover land within which your land falls.

You must appear before the LCB and make your application. It will ask several questions
before issuing the consent. The consent is then extracted i.e. the letter of consent which
you will present together with the transfer. The letter should be signed by the chairman of
the LCB

If consent is denied you could appeal to the provincial LCB. Final right of appeal lies to
the High Court where you can seek judicial review

Does the LCB consent lapse? Especially if you do not register the transfer?
It does not lapse. No such provision in the Act

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.

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 Mortgagee or Chargee

This consent is more often than not expressly stated in the charge or mortgage document.
Its aim is to protect the lender i.e. mortgagee and chargee. S.69(h) of RLA expressly
provides for Chargee‟s consent. It is applicable for instance when you are applying for a
further charge or a second charge over the property.

The Consent of the Landlord [Lessor’s 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.
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 Gichuki Minjire 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”

See also: Kariuki v Kariuki (1983)

Peterson v Robertson (1957)
NOTE: To go round the above you may provide in the Sale Agreement that lack of
consent will not prevent one from seeking an order for specific performance.

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:
- offer and acceptance
- 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.

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 purchaser‟s name. Possession was to be granted on completion or when
20% was paid. Inter alia damages 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 didn‟t the court get rid of the uncertain provisions?
It did not have a „saving clause‟ in case of inconsistency
TERMS OF THE SALE AGREEMENT
S.3 (3) of the Law of Contract Act is silent as to the contents of a contract.
S.55 of the ITPA lays out some of the basic terms of a sale which will be implied to any
sale agreement in the absence of an agreement to the contrary. There is no equivalent
section in the RLA save that s.38 gives the Minister in charge the power to lay out any
implied and general terms in consultation with the LSK. By virtue of s.38, the LSK in
1972, 1982 and 1989 came up with Conditions of Sale which will apply to any open
contract.

S.55 of the ITPA provides that in the case of an open contract (which does not have
various terms) the;
1. Vendor is under a duty to disclose any defects to the property that he is selling
(i.e. latent but not patent defects)
2. Vendor must also produce the title documents for purpose of inspection and not
delivery
3. Vendor is under an implied statutory duty to execute the conveyance or the
transfer in exchange for the payment of the purchase price which entitles one to
move to court for specific performance
4. Vendor will pay all outgoings and discharge all encumbrances registered against
the property
5. Vendor is under a duty to take care of the property after execution of the sale
agreement and before the completion takes place. This includes the management
of the property, ensuring that reasonable repairs are undertaken on the property
and ensuring that there are no squatters or trespassers on the property (one need
not improve the property unless the contrary is provided for)

Dharmashi v Abdulrahman (1950) 24 KLR 24

It was held that the vendor must ensure the property must not physically deteriorate and
must manage the property as appropriate (vendor is trustee)

S.55 provides that the purchaser:

(i) must pay the full purchase price at completion
(ii) upon taking possession is under a duty to disclose any value hidden
fact that he becomes aware of but which the vendor is not aware of

S.55 ITPA does not apply to RLA.

The sale agreement is ordinarily prepared by the Vendors advocate because the vendor
dictates the terms. See:
Salim v Okong’o (1975) KLR – Duties of Vendor‟s advocate
The vendor‟s advocate then sends the draft to the purchaser‟s advocate for perusal and
confirmation of the terms in that sale agreement
Prior to drafting one must have obtained all the details relating to the parties from the
vendor
Engrossment (reducing it into a formal legal document) before registration

CONTENTS OF A SALE AGREEMENT

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

1) You must ensure you get the correct addresses for purposes of sending out
notices
2) On particulars of sale, define the property and the interest to be sold. Both
physical and legal description should be given. Leave nothing to
interference. Also define the interest/tenure sold e.g. freehold, leasehold
etc. You must indicate the correct LR Number

You must also indicate 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…”

Ss. 2 and 3 RLA provide for sale of land plus that which is attached to it. A fixture is
something affixed to land by a human (not like a tree). You must find out if property is
being bought including the fixtures and fittings i.e. they do not attract stamp duty. If you
do not, the vendor may argue that he is entitled to remove the fixtures and fittings.

You could have a schedule listing out the fixtures and fittings being bought indicate the
value of the fittings. The transfer should have a price less the value of fixtures and
fittings.
Wake v Hall [1882] AC 195
Blackman J stated “the degree of annexation is what matters”

Ellitestone Ltd v Morris [1997] 1 WLR 687

Held: It is not just the degree of annexation that matters but also the object of annexation
that matters. If the fixture is annexed for purposes of better enjoyment of the property it is
assumed to be a fixture BUT if it is annexed for the purposes of the item itself it is a
fitting.
NOTE – the fixture forms part of the land BUT the fitting does not form the subject
matter of the sale agreement

Special Conditions
These 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 general terms which apply to open contracts with the intention of regulating the
rights of the party e.g. the right to rescind, give notice, take possession etc Any
conditions varying these terms are special conditions.

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

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 vendor‟s 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

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 purchaser‟s 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 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.
Execution
This is the affixation of one‟s 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.

DEPOSITS
There is no general law requiring the payment of a deposit. One may argue that a sale
agreement is a contract and for it to be valid there has to be consideration. However, a
sale agreement is only executory and does not require consideration.
However, over the years, parties have always paid a customary deposit of 10%. Indeed
the LSK condition of sale 10 states that the deposit shall be 10% of the purchase price.
However, one may have a sale agreement providing that no deposit is required. A
deposit is however included by most conveyancers as a form of commitment and to go
round the illiteracy of most court registrars who will refuse to record a caveat where there
is no deposit.

Nature of the deposit

1. It constitutes part of the purchase price
2. It is a security or guarantee for purposes of completing the agreement. It is more
than part of purchase price. It guarantees the vendor that the purchaser shall
complete the agreement. If the purchaser is unable to complete the vendor is
entitled to exercise his right of forfeiture and forfeit the deposit.
3. The deposit also entitles the purchaser to a buyers lien over the property for the
amount of the deposit paid but only if that deposit has been paid either to the
vendor or to a vendor‟s agent but not to a stakeholder. It is recognised that as
between the purchaser and the vendor there is some symbiotic relationship. This
symbiotic relationship is such that one is entitled to go to court on the basis of the
sale agreement and the deposit paid asking for the property to be transferred to a
third party to hold as trustee as lien pending a refund of the deposit, where
possession has not been granted

Who holds the deposit?

Usually, it is held by either an agent or a stakeholder. When the stake holder holds the
deposit, he holds that money to the order of both the vendor as well as the purchaser.
Even though it is the purchaser who has paid it, it belongs to neither the vendor or
purchaser.
Therefore, if the vendor is unable to complete the money should be returned to the
purchaser in full without any deductions and with possible interest. If the vendor
completes, then the money is paid to him. If the purchaser defaults, the money is paid to
the vendor.
Qn: What happens if the stakeholder mishandles the deposit or becomes insolvent?
NOTE: It becomes an issue of agency and the person who appointed the stakeholder
suffers the consequences:
- If vendor, he should complete as well as going after the stakeholder
- If purchaser, he should pay another deposit

Deposit can also been held by an agent to the order of the person who appointed him. If
the vendor appoints the agent, the amount can be forwarded to the vendor at any time
upon request. If the purchaser appoints the agent, on request the agent can refund the
deposit.
NOTE: If the agent mishandles the deposit or becomes insolvent, whoever appointed
him bears the consequences.
A sale agreement is treated as a guarantee because of the issue of forfeiture. If the
purchaser is in breach of the agreement, the vendor is entitled to exercise its right of
forfeiture over the property (i.e. entitled to deposit)

Universal Corporation v Five Ways Properties Ltd (1997) 1 All ER 254

When to return and forfeit the deposit

Workers Trust Union v Dojap Investments Ltd (1993) 2 All ER 370

The LSK Conditions of Sale (Conditions 3 & 4)

NOTE: The courts generally do not help. However refunds may be ordered:
1. If it has been agreed that despite any breach the deposit shall be refunded;
2. If a court of equity as in Dojap case orders that the deposit be refunded despite
default or refuses to grant specific performance to the purchaser but instead orders
a refund of the deposit;
3. If the vendor himself is in default and is unable to complete;
4. If it is not an earnest security i.e. paid simply as part of the purchase price and is
expressly so stated e.g. payment by installment

NOTE:
1. One can suggest reforms e.g. to reduce the amount of deposit to 5% and to only
exercise the right of forfeiture where specific damage or loss is proved
2. Another reform is to have some form of insurance for the risk taken

COMPLETION AND TRANSFERS

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 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

Date
1. This will have been provided for in the sale agreement. If not, it is deemed that
completion will take place within a reasonable time from the date of completion.
2. If not provided but LSK conditions will apply. Then condition 2 will be
applicable i.e. to take place 42nd day after date of completion but where LCB
consent is required, 42 days from obtaining the said consent

The period before completion is very critical because it is the time the parties:
1. Prepare or satisfy their respective conditions and obligations under the agreement
2. The issue of where the risk of property lies arises. The risk should be balanced
between the parties to ensure the property stays intact.

Read LSK Conditions of Sale 23 on Insurance.

See: Rayner v Preston [1881] Ch. 13

On relationship created in a sale agreement by vendor and purchaser

LSK Condition of Sale 23 – Insurance of property by vendor during the sale agreement
negotiations. If not insured by vendor and property is damaged in the interim, purchaser
has the option to complete transaction and claim damages or to rescind the agreement
altogether.
If the property is insured, even if there is damage, the purchaser cannot rescind, he must
complete.
This is not a fair provision since it will operate against the purchaser‟s interest if he wants
to charge the property.
Date of Completion
When provided for in the sale agreement, it is just a target date for completion BUT if it
is provided in the agreement that the time for completion is of the essence you must
complete on the completion date. If you are in breach, the innocent party may rescind it.

All parties must therefore adhere to the date and deliver what they are required to. Failure
to deliver/complete is a fundamental breach both in law and equity and party at fault will
not be allowed to seek specific performance thereafter.

The phrase time is of essence may be implied in a sale agreement if the parties intend that
time be of the essence.
Berkley v Messenger [1989] 3 All ER 492
Contract simply provided that if purchaser failed to pay balance of purchase price on a
given date the agreement would be null and void.
Jessel MR held: time was of the essence, stating that there was no better way of strongly
expressing that fact than as had been provided.

When time is not of essence, failure to complete on completion date does not entitle the
aggrieved party to rescind the agreement. He can only do so after issuing a completion
notice to the party in default. The notice to complete, the moment it is issued it makes
time of the essence.

The notice must be valid and effective i.e.

a) You must limit the time for performance BUT the limitation must be
reasonable (21 days is reasonable notice)
b) The notice must demand performance of the contract
c) The notice must be explicit i.e. that you will rescind the agreement if
performance demanded is not effected. You must leave no room that
another notice will be given
d) The notice must be served. Service can be effected on either the party in
default or his advocate e.g. “unless you perform on X date, I shall treat
your failure as a repudiation of contract.”
e) The notice must not be premature i.e. when the other party is in default
f) You must be able, ready and willing to perform your part of the bargain.
You must show the willingness e.g. ability to grant vacant possession etc

Completion venue
Usually at the vendor‟s offices or his advocate‟s office. If the vendor has mortgaged
property, completion could be at the Mortgagee‟s or his advocate‟s office. This is where
it is not provided in the contract.
At the venue at 2.30 BOTH parties must be ready to complete. Purchaser delivers balance
of purchase price and the vendor is expected to give vacant possession. The deliverable in
this case is the key of the door to the property. Possession is de facto control where you
hand over to the purchaser i.e. the right to access the premises and exercise full use and
control over the premises

1. For purposes of conveyancing you need to ensure that the property is free from all
physical impediments (Your client should visit the place and confirm this)
2. The property must be free from occupation
3. The vendor‟s advocate also gives assurance/ the conveyance/ the transfer duly
executed and registrable. Inspect the transfer to see that it is executed and attested
and refers to the property being sold. It should be in the correct form depending
on the registration regime i.e. RTA, RLA

Confirm any power of attorney, numbers, photos, signatures etc

The other deliverable is the requisite consent(s) e.g. LCB, Commissioners. Others are the
Land Rent & Rates Certificates, the original title deed and any other document in the
contract.
NOTE – If you get a power of attorney from the vendor you will be able to deal with the
property pending registration of the Transfer. Therefore include this power of attorney as
a deliverable document in the sale agreement

When you receive the deliverable, inspect them and confirm that they are valid
documents which you can use. If you do not do so, your client can sue you for negligence
if the transaction does not proceed.

Once you confirm that the documents are registrable and can confer a valid title to the
purchaser you then deliver the balance of the purchase price or an acceptable undertaking
where the transaction is being financed by a financier.

In practice however, the transaction is completed by one party sending a deliverable on

the undertaking that the other will give delivery of his deliverables i.e. postal completion.

In postal completion, vendor‟s lawyer becomes the purchaser‟s advocates agent i.e. he
has the duty to inspect the completion documents and confirm that they are in order and
registrable and the cheque for the purchase price can now be given to the vendor (i.e. the
cheque was in vendor‟s advocates possession)
LSK Condition 4 – When the purchase price is paid to the vendor‟s advocate he should
hold it as a stakeholder for thirty days till registration of the transfer. On the 30th day he
gives a notice to the purchaser for him to register the transfer within 30 days. After 30
days he gives a 7 day notice after which he releases the cheque to the vendor.

If the property is subject to a mortgage finance, the transfer will be registered by the
vendor‟s advocate. He also hands in the Mortgage deed to the vendor which will be used
to effect registration.
Shaw v Foster [1872] 5 All ER 321
On constructive trustee vis-à-vis purchaser and vendor
Rayner v Preston
Openda v Khan [1984] KLR 208

OTHER FORMS OF DISPOSITION OF PROPERTY

Purchaser from Developers

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.

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 plaintiff‟s advocate save in very exceptional
circumstances e.g. in mortgages and subleases
Salim v Okongo [1976] KLR 42

LSK Condition 24 – Transfer can be drawn by the purchaser‟s advocate. The drafting
responsibility is then in a way passed to the vendor‟s advocate when his approval is so
sought. Purchaser‟s 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
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 vendor‟s 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 WITNESSESTH…”
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
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…”

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.

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, one‟s 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.
- The reversionary interest will vest in the management company.
- The building/architectural or site plans will be annexed to the sub-lease,
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 wasn‟t 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:
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 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

Read Sectional Properties Act (Exam Qns)

PROFESSIONAL UNDERTAKINGS
Read Article by John Kibuchi
In the course of most conveyancing transactions it is common for advocates to enter into
written agreements to do or refrain from doing certain things. These are called
professional undertakings.
These agreements help speed up the process of conveyancing. It helps circumvent
problematic areas. From a viewpoint of a professional it should be noted that:

1) An undertaking creates a legal obligation upon the advocate which is enforceable

by courts by way of mandatory injunctions and court orders. In this respect, the
ability to enforce a professional undertaking is vested solely on the courts. All
courts over the world have a supervisory jurisdiction over its officers. It is on this
basis that courts can enforce an undertaking. O.LII CPA & Advocates Act
expressly allow the court to enforce an undertaking and make such orders as it
deems appropriate to enforce the undertaking e.g. order a fine, jail term etc
 2) The giving of a professional undertaking by an advocate places on him an ethical
obligation to comply with the same i.e. undertakings are deemed sacrosanct. The
LSK is usually the body concerned with ethical conduct of an advocate and this
ethical side of undertakings gives the undertaking its value. LSK can, if it finds
you guilty of breaching an undertaking, fine you, suspend you or even strike your
name off the Roll of Advocates.

Definition of Undertaking
This is an unequivocal declaration of intention addressed to someone who reasonably
places reliance on it and made by an advocate or a member from an advocate‟s firm in
the course of practice or made by an advocate as an advocate though not in the course of
practice.

It is a promise made by the advocate to do or refrain from doing something. It does not
matter what you promise to do or refrain from doing you will be bound.

You must weigh whether the undertaking you give is within your control and you will be
willing to honour it.

There is no limitation, the undertaking could be oral or in writing and it will still be
binding and enforceable. However, it is important to put them in written form so as to
avoid misunderstandings on your part and on the recipient‟s part and for evidential
purposes. Ensure that you are aware of all undertakings sent out by members of your staff
because you would still be bound.

Undertakings given on email may be risky since they can be easily amended and
normally have disclaimers. Faxes are fine.

Always consider what you are undertaking.

KCB v Adala [1983] KLR 487
Undertaking in favour of a layman enforced – The undertaking was not directed to an
advocate but was enforced against the advocate.

Because the promise is given by an advocate he is personally bound by it even if e.g.

your client dies or becomes bankrupt. You must always consider if you have control over
the undertaking. You may have to give a qualified undertaking if in doubt of enforcement
of the undertaking. E.g. I will pay you Kshs X upon receipt of the same from my client.
Also consider the conditions you impose.

Guidelines
1. Breach of an undertaking is prima facie evidence of misconduct – the LSK will
expect the enforcement as a matter of conduct. Failure to honour a professional
undertaking is professional misconduct. The LSK only expects that you honour
the undertaking BUT it will not enforce the undertaking.
2. Undertakings are normally expected to be honoured between the giver and the
recipient only. Undertakings are NOT saleable commodities. Neither the court nor
LSK will be anxious to entertain complaints by people who are interested in the
performance of the undertaking but were not recipients. However, the residual
power to enforce the undertaking vests in the court and could listen to a party who
was not a recipient.
KCB v Adala – Enforcement of the undertaking is with regard and touches on the
honour and honourable conduct of the members of the noble profession. The court
will not hesitate to allow non-recipients to benefit from the supervisory
jurisdiction of the court;
Naftali Radier v Njogu t/a Njogu Advocates & Co HCCC 532 of 2002; An
advocate on the other hand cannot assign an undertaking without the recipients
consent
Ron Otieno v AGN Kamau & Co Advocates HCCC 134/03 – The defendant‟s
advocates had given an undertaking under their former name which partnership
had since been dissolved; when the plaintiff sought to enforce the undertaking Mr.
Kamau argued that a former partner Ms Kimani walked away with some liabilities
including the undertaking. Held: the undertaking was joint and several i.e.
personal to Mr. Kamau and he could not walk away from it
3. Undertaking must be certain. If ambiguous it will normally be construed in favour
of the recipient. This rule exists to prevent reconstruction of the undertaking by
the giver to avoid obligations and liabilities.
4. Proper wording of the undertaking is important because no extraneous evidence.
No terms will be implied/extraneous evidence allowed in an undertaking.
Karsam Lalji v P. K. Kimani t/a Kimani Kairu & Co. Advocates CA 135 of
1999
Advocate ordered to pay monies owed under an undertaking together with interest
although no interest was provided under the undertaking
READ:
Kenya Finance Co v Ng’eny and Anor [2002] 1 KLR 106
5. An undertaking need not constitute a legal contract. It need not have consideration
for it to become enforceable. Principles of contract do not apply because there is
an ethical obligation on the giver‟s part to comply. Question: When can you
enforce an undertaking?
However, where consideration is disclosed in an undertaking, the giver of the
undertaking is discharged if the consideration fails e.g. “upon receipt of the sum
of x/= from the purchaser, I will release the same to you.” You will be discharged
 if the P does not give you the money or if the P was to give the financier some
money i.e. the undertaking becomes more of a legal contract and the principles of
contract apply.
6. An undertaking is binding even if outside the giver‟s control. It demands of the
giver to clarify with the recipient as well as the client the nature of the
undertaking you are about to give. Consider whether you will be able to honour
the undertaking when called upon to do so. It is no defence that the undertaking
cannot be met/honoured due to the death or insolvency of the client on whose
behalf you gave the undertaking. You must be able to control the outcome of the
undertaking. Always ensure you hold funds beforehand.
7. It is no defence that to honour the undertaking would be in breach of a duty owed
to the client i.e. an undertaking is personal and not subject to the whims of your
client. This discourages advocates from giving undertakings flippantly. You will
also not be able to frustrate the recipient of an undertaking who has relied on it by
relying on change of events or circumstances to give an undertaking for balance
of the purchase price but this undertaking should only be issued and be accepted
where the purchase is being financed. You should not accept such an undertaking
where the purchase is not being financed. You need to establish this at the
inception of the transaction and you may include it in the sale agreement.

The purchaser’s advocate should ascertain that he has not only the balance of the
purchase price but also other disbursements like stamp duty and registration fees and
any other disbursements before giving an undertaking.

1. When you are acting for a redeemer bank (redeeming another bank‟s mortgage)
you give them an undertaking that upon registration of the discharge by the
redeeming bank you will give them the redemption funds. You can only give it
after the discharge has been signed.
2. If you are acting for a financial institution lending money to anyone i.e. upon
registration of the mortgage/charge you will release the loan. You must state that
this undertaking is solely for the benefit of the client you state the name of the
client so that no one else can benefit from it.
Questions
1. Give four instances of undertakings.
2. On reforms, why do advocates deliberately fail to honour undertakings?

Should undertakings be limited to advocates with 7 years in practice since old advocates
really respect them but young advocates do not seem to respect them.

Mortgage
This is the conditional transfer of property to a lending institution or bank which transfer
may become absolute if the borrower falls into arrears or is completely unable to make
payments as per the covenants between the bank/lending institution. S.58(a) of the ITPA
and the case of Santley v Wilde[1899] 2 Ch 474
The Master of Rolls Lindley “A mortgage is a conveyance of land as security for
payment of a debt or the discharge of some other obligation for which the land had been
given.” You actually „convey‟ your interest in a mortgage.

Charge
On the other hand while a charge is also a security for money advanced, the property is
neither conveyed or transferred to the lender/bank. In the case of a charge, the interest
will only be conveyed to the lender in a very legal and abstract way after you have
defaulted.

S.58 of the ITPA on forms of mortgages but for a charge there is only one legal form:
 S.58(b) – A simple mortgage
 S.58(c) – A mortgage by conditional sale
 S.58(d) – A usufructuary mortgage i.e. you actually deliver possession of the
property
 S.58(e) – English mortgage (most common)
 S.95 – Anomalous mortgage. Hybrid mortgage or where a mortgage is none of the
ones set out above e.g. Islamic Mortgage – bank buys the property and the
borrower still occupies it as a tenant as he pays rent towards the loan.

e) To obtain all the requisite consents if the same has not been availed by the borrower
e.g. consent to charge from the Commissioner of Lands, L.A.‟s consent
f) Duty to confirm that the borrower has obtained independent legal advice i.e. its
independent in the sense that the certificate is from independent legal qualified advice. It
is critical in a mortgage by guarantee i.e. where the mortgagor is not the borrower, he is
giving his property as security for the lending to a third party. This is crucial because:

1. Most mortgagers say that they did not get the benefit of the loan/amount
2. Most mortgagors say that they did not know what they were doing.

g) Duty to get the lender to execute the charge or the mortgage document. Under the
RTA it states that it is sufficient to have the borrower‟s signature. However, it is
important to take into account s.3(3) of Cap 23 which requires both parties to execute the
document.
h) To stamp or pay stamp duty on the charge documents and lodge the same for
registration at the relevant lands registry as well as the companies registry, where
applicable i.e. the charge document is being created by a limited liability company. See
s.96 of Cap 486 dictates that unless a notice of charge created by a registered limited
liability company is lodged within 42 days of the date of its creation with the registrar of
companies, the charge will be void against the liquidator or any creditor of the company.
Lodge Form 214 within 42 days with the Registrar of Companies. In case of non-
registration of the charge document and the company winds up, the charge will rank pari
passu with the unsecured creditors of the company.
i) Complete the transaction by account not only to the borrower‟s advocate but also to
the lender.

Duties of Lender’s Advocate (continued)

The duty to draft the mortgage deed – is imposed on the lender‟s advocate whereas the
borrowers advocate only approves the same after perusal. The lender‟s advocate should
ensure all important covenants are included.

To obtain all the requisite consents – This duty is ordinarily the borrowers but where
there is failure, the lender‟s advocate must act.

Duty to confirm that the borrower has obtained independent legal advice – independent
legal advice should be sought from a qualified advocate. It is very critical especially
where there is a mortgage or guarantee. Where the chargor is actually not the borrower
but is just giving his property as security by way of guarantee. Also called third party
mortgage/charge.
NOTE: Independent legal advice relates to the effect of the advocates certification of
having explained the effect of s.69 and the consequences or effects thereof.

To cause the lender bank or its attorneys to execute the mortgage/charge document – The
RTA and ITPA provisions seem to be of the view that it is okay for only the
chargor/borrower to execute the document. However, s.3(3) would raise difficulties as far
as enforcement is concerned as it requires both the lender and borrower or their agents to
execute.

To pay stamp duty on the charged document and lodge the same for registration in Lands
Registry as well as the Companies Registry when applicable i.e. charge or mortgage
being created by a limited liability company. S.96 of the Companies Act indicates that
unless a notice of charge created by a registered limited company is lodged within 42
days of its creation with the registrar of companies, the charge will be void against the
liquidator or any creditor of the company. If the company goes into liquidation the
chargee will be ranked at the same level as unsecured creditors.
To complete the transaction by accounting not only to the borrowers advocate but also to
the client (lender) i.e. releasing the loan proceeds cheque and refunding excess fees if
any.

Responsibility of Borrower’s Advocate

1. To obtain and deduce the title documents which are expected to be the subject or
the mortgage transaction.
2. To obtain all the necessary consents and clearances required for successful
finalization of transactions.
3. To release the original title documents to the lender‟s advocate for purposes of
completing the mortgage transaction. This is usually after receipt of a professional
undertaking that the documents will be used solely for the purpose of registering the
security.
4. To approve the mortgage deed or charge document as drawn because they are
ordinarily standard documents. One must advice the borrower on the effect of
charging and mortgaging of his property at this stage i.e. that default in repayment
will result in loss of the property. A client should sign the certificate that the
explanation was given and understood. If there is evidence that such advice was not
tendered, the document can be declared null and void.
5. Duty to obtain adequate or enough funds for purposes of stamping or registering a
mortgage or charge document.
6. Duty to prepare the reconveyance or instrument of discharge if still seized of the
brief.

This process is the same with a further charge and further mortgage (save for
investigation of title) and second charges and second mortgages.

Further charge
Borrower and lender always the same – RLA and RTA

Further mortgage
Same borrower and lender – GLA and LTA

Second charge/mortgage
There is a new party in the form of a second lender or financial institution advancing
additional finances. The second financial institution requires the consent of the first
lender.

Note: Second mortgages and further mortgages have been questioned because the
mortgage transfers the interest in the first place and nothing is left save for reversionary
interest.
Important covenants in a mortgage and a charge
At any given time, one should ensure their client has a good security – one should
therefore ensure the document complies with all the statutory requirements e.g. statute of
registration, law of contract act; the document must be signed by both parties and the
execution aforesaid must be attested. The forms do not matter.

S.108 RLA states that the forms under the Act are to be utilized but these can be varied
with the approval of the Chief Lands Registrar. S.65(1) RLA states that to create a charge
you must use a specified form and register it.

S.74 RLA dictate that the chargor/borrower must sign a certificate which must be attested
that he understands the effect of s.74 of the RLA on remedies on default. S.69 ITPA also
states that the certificate must be signed by an advocate certifying that he has explained
to the borrower the effect of the mortgage.

Labelle International Ltd v Fidelity Commercial Bank [2003] 2 EA 541

Ng’eny v Kenya Commercial Finance Co. Ltd [2002] 1 KLR 295
Have held that the lack of that certificate will not fault the chargor/mortgagor‟s right to
sell the property.

Labelle International Ltd v Fidelity Commercial Bank [2003] 2 EA 541

A wife and husband guaranteed their company loan advances made by the respondent
bank. The borrower defaulted. The bank issued a statutory notice and upon its expiry the
bank moved to sell the property charged to it by way of public auction. The borrower and
the chargors moved to court and contended that the charge gave no statutory power of
sale to the bank because the execution of the charge had been witnessed by an advocate
but the certificate under s.69 had been signed by another advocate altogether.
Nyamu J held that lack of the certificate or even improper execution of the charge
document does not take away the statutory power of sale granted by both the charge
document and the statute to the bank. This upheld the provisions of s.3(3) of the Law of
Contract Act.

What are the crucial covenants in a mortgage/charge?

1. Proper description of the parties, their addresses and the properties to be
charged/mortgaged. This is crucial especially when a need to exercise statutory remedies
arises i.e. one needs to serve a statutory notice to the borrower.

See:
Simiyu v Housing Finance Co. Ltd [2001] 2 EA 540
Ringera J held that where the plaintiff has shown a correct address and has alleged that
she was not served with the statutory notice, she was entitled as a matter of course to an
injunction restraining the bank from selling the property for lack of a proper statutory
notice.
NOTE: Where the lender is in possession of several addresses, the best approach is to
send the statutory notice to the last known address.

2. The covenant to repay the amount advanced. This covenant should encompass the
principal amount advanced as well as any interests accrued or charged. Also include the
redemption date. This is important because in the event of default on the part of the
borrower and the lender issues the statutory notice, sells security and there is a shortfall,
this covenant to repay will be the basis of suing for the shortfall. Without this covenant,
one cannot sue for the shortfall. Without this covenant, one cannot sue for the shortfall.

Qn: When does time start running for purposes of limitation of actions?
Ans: When there is default

The covenant is also an acknowledgement of the borrower‟s indebtedness to the lender

and will aid one in moving the court to obtain summary judgment.

3. The covenant to keep the property in good repair and condition. The essence of a
mortgage/charge is security. If the property goes to waste, it is of no use to the lender.
There is need to ensure this covenant has some efficacy. This is attained by the inclusion
of e.g. must be insured, right of chargee to enter and inspect, the chargor to pay rent and
rates, no alterations without the consent of the chargee/mortgagee, no transfer or lease of
the property and that the property shouldn‟t be given as securing for another loan to
another party.

There is need to bind the borrower to pay taxes and rates etc

Charging Clause
This is the covenant that creates the security. Without this, there is no security i.e. „THE
BORROWER HEREBY CONVEYS, ASSIGNS etc”
The charging clause is not only confined to the property i.e. LR No X. One must go
further and charge also all improvements, fixtures and fittings in the property (Pattni
Case)
Equip Agencies v. Credit Bank Ltd [2004] 2 EA 61
The charging clause didn‟t include chattels fixtures and fittings. It was held that in the
absence of a chattels, mortgage or a debenture, the bank could not sell the chattels,
fixtures and fittings but could only sell the land.
The redemption covenant
The equity of redemption can never be taken away and for purposes of this covenant,
must never be fettered. In the absence of such a covenant, the court sitting as court of
equity is under an obligation to determine whether or not the intention of the lender was
to use the equity of redemption and also ensure that the security is indeed a dead pledge.
The equity of redemption under s.72 RLA disappears the moment the lender correctly
sells the property. See also s.60 ITPA

Qn: What happens where amount is repaid, reconveyance executed and owner fails to
collect title from bank. Can you claim title after 12 years or is your equity of redemption
no longer in existence?

REMEDIES FOR MORTGAGEES AND CHARGEES

Chargees and Mortgagees
1. Equity of redemption enforced under Order 36
Lender‟s
Statutory remedies for GLA, LTA and RTA are found in s.69 ITPA as follows:

A. STATUTORY POWER OF SALE

Arises only after the mortgagor or chargor is in default and an appropriate valid
statutory notice is served upon him which notice is not needed. The mortgage or
charge must be valid and enforceable. The mortgagor is in default where the
amount due is not paid on the due date. The statutory notice on the other hand is
considered not to have been heeded when the mortgagor who is already in default
does not pay the mortgage debt for three months after receipt of a notice to repay
from the mortgagee.
NOTE: The statutory notice demands full payment of the amount due. Any
interim payments whether received in good faith or on a without prejudice basis
will not void the statutory notice.
See:
Eros Chemists Ltd v Trust Bank Ltd CA [2002] 2 EA 550
A five judge bench held that the wording of a statutory notice must state and give
three clear months within which payment must be made and thereafter only can
the statutory power of sale be exercised. The notice starts to run upon service of
the same.

2. Under section 69 you can also exercise the remedy of selling the property if the
borrower defaults in paying interest for a period of two months or more without
giving the statutory notice.
NOTE: Should you make a demand for the notice, it is deemed a statutory notice
and one must within three months.
 3. It can also be exercised if the borrower is in breach of a covenant in the
mortgage deed or charge document. You must however also give notice of breach
and a chance to correct the breach.

The sale under the ITPA is ordinarily by public auction. However, it also allows one to
sell by private treaty. The choice is the lenders‟. See:
Maranya v National Bank of Kenya Ltd [1995-98] 1 EA 177
The plaintiff argued that the sale was irregular and void as the defendant had sold the
plaintiff‟s charged property by private treaty after the defendant had advertised to sell by
public auction. The COA held that s.69 of the ITPA allows the bank to sell by either
mode and this statutory right cannot be taken away merely because of early advert by
public auction.

In realizing the security, the lender must exercise good faith even though he is not a
trustee for himself or borrower. Where there is carelessness, the bank will not be liable to
recover the shortfall and will be open to liability in damages. See:
Cucimere Brick Co. Ltd v Mutual Finance [197-] 2 All ER 633
Sajabi v Amreli Wala [1956] EACA 71
Good faith to be exercised even in private treaty sales.

B. APPOINTMENT OF RECEIVERS
Under the ITPA receivers can only be appointed after the statutory power of sale
has arisen as they must have the power to sell the property. The receiver is not the
agent of the lender even if appointed by the lender i.e. protects the interests of the
borrower.

C. FORECLOSURE
This is the right conferred upon the lender under the ITPA to move to court and
extinguish the equity of redemption. Consequence – borrower/mortgagor ceases
to have any interest in the propery. It then matters not if good faith is not
exercised. The remedy of foreclosure is expressly established by s.80 of the RLA.
This is because in a mortgage some interest is conferred whereas in a charge there
is no interest transferred thus no need to extinguish interest.

D. RIGHT TO SUE ON THE BASIS OF THE COVENANT TO REPAY

This remedy is available to both the chargee and mortgagee by virtue of s.68
ITPA, where the right can only be exercised after the property has been sold.
Under s.74 RLA this right can be exercised even if the property has not been sold
but as long as the amount is due. The court‟s permission is required.
NOTE:
 Under the RLA you cannot sell the property by private treaty unless:
a) the sanction of the court is obtained;
b) and if in the charge document that right had been reserved

Aberdare Investments Ltd v HFCK Ltd [1999] 2 EA 1

The COA held that the choice of which remedy you take as your first remedy is yours as
the mortgagee/chargee. You have a wide choice and the mortgagor cannot dictate to the
bank which particular remedy he needs to be exercised first.

LEASES
S.3 of the RLA defines a lease as a grant with or without consideration by the proprietor
of land to another person to the exclusive possession of that land. S.105 of the ITPA
states that a lease is a transfer of a right to enjoy such property made for a certain time or
in perpetuity in consideration of a price paid or promised.
NOTE:
A lease entails a transfer or grant of a right or interest in property for a limited period of
time (RLA) or even in perpetuity (ITPA) Exclusive possession. Whoever is granting the
right excludes himself from interfering with lessee‟s possession.

Definitions are also found in caselaw. See:

Street v Mountford [1985] AC 809
Lord Templeman at p.817 stated that for a lease to exist, an occupier must be granted
exclusive possession for a fixed or periodic term in consideration of a premium or
periodical payments. The essential ingredients of a lease therefore are:
1. There must be an occupier (constructive or actual)
2. There must be exclusive possession
3. That exclusive possession must be transferred or granted by the proprietor
4. The period of the lease must be certain
5. The premium or rental payment is a crucial term

Exclusive possession means:

a) Right to use property; and
b) Right to exclude anybody from leased premises including the Landlord (save
where a notice given)

The premium/price for lease is not an absolute essential. This is why s.3 RLA excludes it.
Therefore an arrangement which grants exclusive possession but does not provide for rent
is still enforceable e.g. a peppercorn

Period
The ITPA and RLA do not make clear provisions of the period. However, it is essential
that the period be certain. A conveyancer should consider period carefully becaused
under RLA, if the lease is for more than two years, for it to take effect in rem, it has to be
registered. ITPA – lease over one year should be registered.

Parties
Must be certain.

Grant
This is the transfer of the property for a particular period of time. The terms of the grant
should be certain. See:
Rye v Rye [1962] AC 496
Lord Denning gave instances of situations where you can grant a lease to yourself. JLO
thinks it is not possible especially a right of the principle of mergers of the --- interest. He
gives instances of a firm of lawyers who own property and lease it to the firm. The two
essentials which distinguish a lease from a license is:
- Exclusive possession
- A grant of the interest
A licence on the other hand is a mere permission given by the proprietor of the land to a
licensee to do some act in relation to the land which act would otherwise be deemed to be
trespass if the permission was not granted.

NOTE: In a license, there is no exclusive possession whatsoever.

This distinction is also important because of the rent regime acts Cap 296 and 301 were
intended to protect tenants from scrupulous landlords. However, it has been decided that
what matters is not just the document but the actual happening on the property.
See:
Street v Moundford
In leases, the interest granted can be assigned to ---. In licenses if the permission given
cannot be assigned to a third party i.e. you cannot mortgage it, transfer or inherit it.

The formalities of leases:

1. All leases must meet the legal formalities provided for under s.3 of the Law of
Contract Act i.e. signed, attested and reduced into writing.
2. If the lease is for more than two years under the RLA, it must be registered for it
to create a right as against the whole world. If for more than one year under the
ITPA it must also be registered.
3. Both the RLA and the RTA prescribe forms to be used for leases. The RLA
format is mandatory unless the consent to vary is obtained from the Chief Lands
Registrar. The prescribed forms in both regimes are very limited. Therefore most
 lessors will draft the lease to include as many covenants as possible. Covenants
can be found under s.108 ITPA and S.50-55 RLA

Examples
1) The lessor must covenant to give quiet and peaceful possession –
ITPA (s.108);RLA (s.53-55)
2) The lessor must also covenant not to derogate from the grant/lease
as given to lessee
3) The covenant that the premises is fitting for habitation. This is a
covenant on the part of the landlord.
The tenant (lessee) also has covenants expected of him. See:
s.64 RLA
s.108(b) ITPA

The covenants include:

 The covenant to pay rent
 The covenant to pay rates, taxes and other outgoings
 The covenant to put the property in good condition and repair

In drawing these covenants, the conveyancer should not be oppressive. He should ensure
the interest of both parties is catered for. In this regard, even though a covenant against
sub-letting is included in the lease, there is usually a rider that: “unless consent of the
lessor is obtained.”

In the case of commercial properties, the leases will always be very detailed and include
additional covenants i.e.
1. The covenant to pay a service charge and to account for the same
2. A detailed clause on the limitation as to the user of the property
3. An insurance clause
4. Restriction on weights which may destroy the premises let

The covenant that limits the users of the property must be strictly observed i.e. if the
premises are let as an office you must use them as an office. The landlord on the other
hand is also duty bund not to interfere if you are using it for the purpose let to you.

Duties when acting for the Lessor/Landlord

1. The duty to draw the lease. In order to do the above one must obtain all the
necessary and proper details and instructions so that the lease will reflect the
precise wishes of the Landlord. One also needs to obtain the precise details of the
property. The whole idea is to protect the reversionary interest (for the lessor)
 2. You must obtain all the requisite consents e.g. LCB consent (where necessary),
Commissioner of Lands consent

Duties when acting for Lessee/Tenant

1. Investigate the Landlord‟s title to ensure he has the capacity or right to grant the
lease
2. To approve the draft lease which having been drawn by the Landlord‟s advocate
will be sent to you. Read clauses, understand and explain the same to the lessee
especially when you come across unusual terms. See:
Sykes v Midlands Bank Ltd [1917] 2 All ER
An unusual clause was detected by a lawyer who did not deem it fit to explain to
client. He was held liable in negligence.
3. Ensure that all the disbursements are availed. These include: registration fees,
stamp duty, legal fees
4. Ensure the landlord obtains all the requisite consents

Termination of Leases
1. By effluxion of time
This is the expirty of the time stated in lease – s.64 RLA, s.111 ITPA

2. By giving of a notice
This must however be provided for in the lease document and also must indicate
the period of the notice. It is not necessary for leases for fixed periods.

3. By forfeiture
This refers to the determination of the lease by the lessor for breach of a condition
by the lessee or in the event of the lessee becoming insolvent. This mode of
determination can be court assisted i.e. asking the court to declare that the lease is
terminated by virtue of the breach of the lessee. Where the lessor does not act
when there is a breach, he will be deemed to have waived the right of forfeiture.
An action must be taken within a reasonable period of time upon detecting breach.

4. Surrender
The lessee yields up his interest back to the lessor. It is usually done by mutual
consent. If there is no mutual consent, the lessor is entitled to claim his rent for
the unexpired rent by way of civil suit. S.63 RLA provides that the lease can be
surrendered by writing the words “SURRENDER” on the original lease
document.

5. By way of a merger
 i.e. a merger between the leasehold interest and the reversionary interest. The
merger of this two interests must however be with the same person.
-----
REMEDIES IN CONVEYANCING
As an advocate your advice is not limited to theoretical solutions i.e. statutory provisions.
One must pick on a relevant/correct remedy in practice. Every case must be considered
on its own facts. The remedies in conveyancing are four-fold i.e.
1. Statutory remedies
2. Equitable remedies
3. Common law remedies
4. Quasi remedies e.g. cautions, caveats, inhibitions, prohibitions

Common Law Remedies

1. Damages
2. Rescission

Damages
The issue is to ensure that the damages to be awarded are given as if the contract had
been performed. Value the property depending on the loss of bargain. The compensation
is and must be intended to put the aggrieved party in a position equivalent to that which
would have existed if the contract had been performed e.g. if the contract is performed
and vacant possession is not given, damages will be limited to the time you did not have
vacant possession until when you get it.
Since these are common law remedies, you must mitigate your losses and not just wait
for court to determine. If the transaction is not completed advice your client that the party
in breach must compensate you. However, you must demonstrate that you were also
ready and able to complete i.e. both of you have to be in a position to complete.

If the above can be shown, when does the court assess the amount due to you?
NOTE: the assessment is done on the day you go to court and the court will award
interest to cover the wasted years. Ringera J has however held that assessment must be as
at the day of judgment.

Rescission
This is the right to undo the contract either through self help or with the court‟s
assistance. This right will take place when there is evidence of fraud on the part of either
party. Also when there is misrepresentation which gets to the root of the contract e.g. a
misdescription of the property to the contract which induces you to enter into the
contract. If it is not part of the agreement, you will not be allowed to rescind as you
would have inspected. When there is a defect in title which cannot be rectified on notice.
NOTE:
These vitiating factors must not be trivial.

Equitable Remedies
1. Specific Performance
As the appellation suggests, specific performance means to call upon someone to perform
his part of the bargain specifically with the assistance of the court. See:
Hasham v Zenab [1960] AC 316
The vendor tore the sale agreement immediately upon execution and having received the
deposit. The purchaser moved to court and asked the court to order specific performance.
The vendor argued that he had not sold two acres but only half an acre. He also argued
that there was no evidence that he was going to breach the contract. The privy council
held that specific performance was the right remedy and analysed it.

Since specific performance is an equitable remedy, all the maxims of equity will apply
e.g. equity will not act in vain e.g. if property has been sold or let; he who seeks equity
must come with clean hands i.e. you must not be in breach

A court of equity will not abuse equity i.e. act to affect another party entitled to an
equitable remedy i.e. with competing interests. The court will weigh the two interests and
will not abuse that other equity.

Read:
Bullen & Leake on Specific Performance

2. Injunction
This is always sought as an interlocutory/cautional measure to stop e.g. disposal. Stops
also attempted breach. An injunction can also be a specific final measure e.g. where there
is a breach of contract.

STATUTORY REMEDIES
1. Right of redemption
2. Foreclosure
3. Statutory Power of Sale – this cannot be taken away
4. Damages – RLA & ITPA especially where your property is sold to a bona fide
purchaser for value without notice s.69 ITPA
5. Rectification – Found under all the statutes; RLA (s.142), RTA (s.59), LTA
(s.69), GLA (s.120) – Ordinarily, this is a post completion remedy. It comes into
play after the conveyancing has been finalized e.g. you borrow 20 million but the
charge registers 10 million, you can move to court to ask for rectification of the
title or even the conveyancing document itself. Object of rectification is to correct
 a genuine mistake for accurate records. Rectification was originally to correct oral
mistakes and thereafter extended to fraud and correction generally.
6. Remedy under the Distress for Rent Act i.e. taking away items to activate
payment.
7. Cap.296 Landlords & Tenants, Shops, Catering Establishments…Cap301

CAUTIONS AND CAVEATS (QUASI-REMEDIES)

These are really not remedies but are encumbrances. Persons holding unregistered
interest in registered properties can protect themselves by registering cautions, caveats,
inhibitions and prohibitions (restrictions against the title). These are encumbrances as
they fetter the rights of the registered proprietor to convey the interest in the land against
which the encumbrance is registered.

Caveats are lodged by any person who claims some defined interest in land capable of
registration e.g. mortgagee, lessee etc A caveat itself is an instrument which forbids the
registrar from effecting any registration against the subject title absolutely or unless the
transaction is expressed to be subject to the claim of the caveator or as is required by the
caveat itself. Caveats are bound under ITPA properties.

Cautions belong to the RLA regime. It is a requisition to the registrar requiring notice to
be given to the cautioner before a registration is made under any disposition by the
registered owner of the land.
NOTE: Registrar can do something on title when a party other than the registered owner
deals.

Consequently, it is important that when you lodge a caution, you routinely conduct
searches on the title, to ensure that the caution is in place. This is because the caution is
limited to actions by the registered owner only. The Registrar is not only bound to notify
the cautioner e.g. by a JD action
In both instances, i.e. before you lodge a caveat or caution, you must support your claim
by facts sworn in an affidavit showing your interest which must be prima facie
enforceable e.g. the claim of a scorned or prejudiced purchaser.

A licensee can also lodge a caution. This is a way of protecting unregistered interests –
s.131 RLA. A caution will also be lodged by a petitioner in bankruptcy (s.131 RLA) to
preserve the property. This is a temporary protection that subsists until such time as one
is able to convert this interest into a registered interest i.e. pending litigation or
settlement.

Thus, a caution can be very easily removed. It is often abused by the Lands Registry. If
you lodge a caution and the registered proprietor contests it, the registrar is under an
obligation to notify you to remove the caution and if you do not show cause of why the
caution should not be removed, the registrar will remove it. If you lodge the caution
unreasonably then you will be asked to pay compensation to any person who has suffered
as a result of the caution. NOTE: the same applies to caveats.

Inhibitions and prohibitions are also same as caveats and cautions but are issued by the
court i.e. a court order stopping any dealings in land for a particular period of time or
until another order is made.
Inhibitions – RLA s.128
Prohibitions – GLA, RTA, LTA

The object is to protect registered interest from being defeated.

Distinctions:
1. Caveats and cautions – prescribed forms by individuals
Inhibitions and prohibitions – court order
2. Caveats and cautions – compensation if wrongly lodged
Inhibitions and prohibitions – no compensation
Various Purchasing Situations with respect to Sale of Land (Koki Mbulu)
(1) Purchase of New Houses, Flats and Apartments
Entails a sale agreement for land just like any other sale agreement for land. However the
terms of sale will be crucial such as ownership of shares in a management company
which manages the day to day affairs of the estate, attends to the affairs of the owners.
The reversionary interest of the property will be transferred to the management company
upon registration of all the leases of the flats/apartments. This is to ensure perpetuity of
the lease.

Interests to look at are the shareholders of the management company; right of

management company to obtain the reversionary interest, provision for the formation of
the management company and ownership of the management company.

A developer will develop the flats using the buyer/tenant‟s money therefore one has to
look at the contractual terms in relation to construction, completion date, whether it is
feasible, whether other construction work needs to be done or whether it is logistical.

Occupational certificates from the local authorities are crucial. They certify that the
development is proper within the jurisdiction of the local authority and are in accordance
with the plans that were presented to them.

Rectification of defects (defects liability period between 30 – 60 days) where the

developer will repair any defects noticed within that period at no cost to the tenant. In this
clause, the client will retain a certain sum to cover for the defects liability period

How is the level of progression audited especially where the developer is using your
client‟s money to develop the flats? The sale agreement needs to provide for this auditing
through qualified personnel such as quantity surveyors who will not necessarily be the
developer‟s employees i.e. independent personnel

One also needs to check how much your client will pay upon the transfer of the
reversionary interest. That figure should be known before the signing of the agreement
because if left out it can be hefty. It is usually between 10,000 and 50,000.

The sale agreement also provides for some extra charges. However, there is no rule that
states that the buyer should pay the vendor‟s advocates fees. If your client is going to pay,
then it should be established early in advance. (However, nowadays when it comes to
buying of apartments there might be such a requirement in respect of the fact that the
vendor’s advocates will also handle the formation of the management company and fee in
respect of the same to the purchaser.) Other charges are electricity deposit, water deposit
etc (these amounts need to be the statutory amount), six months service charge (security,
caretakers fees, maintenance of car park, swimming pool, playground and gym etc) The
service charge ought to be audited by the management committee.

The sale agreement should provide for the amount to be paid by your client for his share
in the management company. This should not exceed Kshs.10,000. In relation to new
houses, management company does not apply however occupational certificates will
apply.

(2) Purchasing under Sectional Properties Act

See Nyayo Estate in Embakasi under the NSSF scheme.
The Act has a model purchase agreement.

Distinction between sectional titles and sub-leases is:

In subleases, management performs all duties but in sectional titles a corporation will
perform the functions of the management company and will not be incorporated or
registered under law. It is automatically constituted after issuance of sectional title. It has
the same function as the management company.

(3) Sale of Land

Use the same sale agreement as discussed in the last class. Look at sale agreement
precedent

(4) Purchase of land by way of shares in a Co-operative Society that owns land
E.g. In parastatals, Housing co-operatives
Members own shares in a company that owns land. Cooperative societies can own land
and it will be a tenancy in common ownership. The important provisions will be how
does your client own shares in that company, the land, acreage and when subdivision will
take place. An acquisition agreement between the Co-operative and the Purchaser has
been signed. The Co-operative must own the land in common. By virtue of owning shares
in the Co-operative society the purchaser will also own his share in the land in common
with other shareholders. Share certificates must be issued to members as proof of
ownership. There is need to do due diligence to establish the acquisition of the land and
the affairs of the co-operative society and company i.e. is the land overvalued?
Overcharging of advocates fees? The share certificate should state the shares owned by
the purchaser.

(5) Purchase of Commercial Property for Development Purposes

Check for change of user and subdivision of the land. Change of user is where the
purpose of the property is converted to another purpose e.g. Mombasa road it was for
industrial use but now is being converted to residential use.
The sale agreement should state who will bear the cost of change of user i.e. in most
cases it will be the purchaser. The vendor usually pays for the subdivision costs. One
must be wary of certain things when purchasing a commercial property:
- status of tenancy i.e. leases for 5 years or protected tenancies. This will affect
possession clauses i.e. is he taking the property with tenants (if so, should
confirm the exact number of tenants) or without tenants
- Are there fittings and fixtures? If so how does one craft the sale agreement?

Auction Sales
Also a purchasing situation i.e. where someone buys property advertised. An auction is a
public or private sale by way of an auction signified by fall of the hammer. It arises in
two situations:
a) Execution order of court
b) Statutory power of sale

Auctions are governed by the Auctioneers Act plus the rules. Also the CPR apply i.e. O.
XXI. The RTA & RLA also have provisions for sale by way of auction i.e. by a
Mortgagee/Chargee exercising a statutory power of sale.

Requirements under Cap 23 as to execution of contracts by both parties do not apply. See
s.3. A binding contract is formed when the property is knocked down to the highest
bidder and after the bid has been accepted by that bidder. Sometimes the sale can be
challenged e.g. where it is sold below the reserve price or where the seller did not
exercise good faith (or lender/auctioneer does not exercise good faith)

NOTE – The reserve price must correspond to the market value so as to demonstrate
good faith

The terms of sale are dictated by the Mortgagee/Chargee. They are usually standard terms
of contract

Where the sale is by an order of the court, the court sets the terms of the sale e.g. reserve
price. If court says the property must get the reserve price any sale below this is void.

Who can bid? The owner, other people can bid and the decree holder. The auctioneer
must accept at least 10% of the purchase price as deposit or what has been set. Bidder
must be ready to pay this amount at the fall of the hammer.

Proceeds are used to offset the loan, balance or money owing.

Obligations of an advocate in this transaction include carrying out a search, carrying out a
valuation to establish if reserve price is proper, send out requisitions to Bankers, Lenders
or Auctioneer so as to find out if there are suits pending with respect to the property. You
should also advice on the purchase price, whether the deposit is to be forfeited etc

If you are acting for the bank, ensure it is acting in good faith i.e. you need to advice
them to sell the property at the best price possible that it can fetch. Any balance over and
above what is owed should be returned to the lender.

Where the sale is by any other financial institution the proper procedures must be
followed as per the relevant statutes.

Once the contract is signed by the Auctioneer he issues a certificate.

Execution may be done by the Mortgagee/Chargee i.e. a Transfer by Mortgagee/ Chargee

See. S.21 of the Auctioneers Act i.e. time, date and place of sale must be advertised in the
newspaper and whether the sale is reserved (i.e. private treaty) where there is no reserve
price (public sale) the seller should not bid. Property should be sold to the highest bona
fide bidder if his price corresponds to the reserve price

The Auctioneer must have a valid practicing certificate for that year because failure to
hold such may render the sale void.
SALE AND PURCHASE OF LAND
Steps Commonly Taken By Seller’s Advocate
1. Take instructions from Seller
- Take Seller‟s instructions including details of proposed, of related
purchase, authorization to disclose details in chain transaction, replies to
pre-contract inquiries etc
- Check conflict of interest issue
- Discuss fees, disbursements, taxation matters and confirm instructions
- Check and confirm that proceeds will clear any encumbrances
2. Draft initial letters
To agents, to client, to Buyer‟s 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‟s answers to pre-contract inquiries
5. Draft the Contract and dispatch to Buyer‟s Lawyer with copy to Seller for
approval. Send also to Buyer‟s advocate
- copy or abstract of the Title
- reply to pre-contract inquiries
- copies of relevant planning consents, covenants, easements, licenses,
insurance certificates etc
6. Engross the Contract (Sale Agreement) on receipt from Buyer. If amendments
proposed then consult with Seller before engrossing.
7. Return Contract to Buyer for execution or signature.
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 Buyer‟s 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 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 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

Steps Commonly Taken By Buyer’s Advocate

1. Take instructions from Buyer
2. Consider conflict of interest
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. capital gains tax, VAT and stamp duty
implications on the transaction
7. Consider Surveyor‟s or Valuer‟s Report
8. Deal with planning matters
9. Make pre-contract searches and enquiries
10. Consider the draft Contract and raise pre-contract enquiries of the Seller
11. Investigate Title and raise requisitions
12. Consider Seller‟s replies to pre-contract enquiries and requisition. Consult on the
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 Seller‟s
Advocate
18. Receive counterpart Contract signed by Seller
19. Draft Conveyance and send for approval and upon its return engross the 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 and Mortgage
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.

MODEL SALE AGREEMENT CLAUSES

1. Parties
2. Definitions and interpretations
3. Law Society Conditions of Sale (General conditions)
4. Agreement for Sale and interest sold
5. Purchase price and Deposit
6. Completion and completion documents
7. Special condition (s)
8. Capacity
9. Possession and movables
10. Matters affecting the Property
11. Outgoings and income of the Property
12. Assignment
13. Default
14. Non-merger
15. Stamp duty and related costs
16. Disclaimer
17. General
18. Intention to be bound
19. Execution