PARKLANDS LAW CAMPUS

INTRODUCTION TO CONVEYANCE AND LAND REGISTRY PROCEDURES

LECTURER- SIMON MWANGI

WEEK 1

1. Define Land and sources of Land Law.

2. Classification of Land and Proprietary rights in Land.

3. Define the scope of Conveyancing.

4. The meaning of Conveyancing, convey, conveyance and

conveyancer

5. Conditions attached to Conveyancing Instruments.

DEFINE LAND AND THE SOURCE OF LAND LAW
DEFINING LAND

Land is a real property and includes not only the face of the earth but everything
of a permanent nature over or under it.

Under Article 260 of the Constitution of Kenya, land is defined to include the
surface of the earth and the subsurface rock; any body of water on or under the
surface; marine waters in the territorial sea and exclusive economic zone; natural
resources completely contained on or under the surface; and the air space above the
surface.

This definition is based on the classical legal maxim of ‘cujus est solum ejus est as
coelom et ad inferos,’ basically meaning, ‘he who owns or possesses the surface
of land owns or possesses all the underlying strata and the column of space
above the surface.’ Another legal maxim to reference the definition of land is
quidquid plantatour solo, solo cedit meaning ‘whatever is attached to the ground
becomes a part of it’. The rule also implies that objects attached to the building in
question become annexed to the realty with the result that they are regarded as
“fixtures.

Proprietary rights can ‘run’ with the land and can confer benefits and burdens on
whomsoever comes to own the land. To claim property in a resource is, in effect,
to assert a strategically important degree of control over that resource. These
proprietary rights can include: include the right to use or enjoy the property, the
right to exclude others, and the right to sell or give away.
In Dorman versus Rodgers 1982) 148 CLR 365, Justice Murphy said, “in modern
legal systems, ‘property’ embraces every possible interest recognised by law which
a person can have in anything and includes practically all valuable rights.”
SOURCES OF LAND LAW

1. Constitution of Kenya, 2010

Land and environment is addressed under Chapter Five (5) and Parliament was
mandated to enact legislation to give life to some of the Articles in the Constitution.
Article 68 in particular gave Parliament the mandate to enact legislation to ‘revise,
consolidate and rationalise existing land laws. The Fifth Schedule to the
Constitution provided that the legislation on land was to be enacted within 18
months of the adoption of the Constitution of Kenya, 2010.
 2. Statutes
It was pursuant to the above provisions of the Constitution that the Land Act, 2012
and the Land Registration Act, 2012 were enacted to revise, consolidate and
rationalise the land laws that existed as at the passing of the Constitution in 2010.

The Land Act is the current substantive land statute Act. It provides for classification
of land and interest in land.
a) The Land Act, No. 6 of 2012
• Enacted to give effect to Art. 68 of the Constitution to revise, consolidate,
rationalize land laws; to provide sustainable administration of land based
resources and for connected purposes.
• It is a substantive land law statute and it repeals the Wayleaves Act and the
Land Acquisition Act.
• Covers areas such as Management of Public Land and Administration of
Public
• Land (which previously would have been under the GLA), leases, charges,
compulsory acquisition of land and easements.
b) Land Registration Act, No. 3 of 2012
• Enacted in 2012 alongside the Land Act.
• Provides for the transactional aspect of land law.
• Establishes office of the Chief Land registrar and other land registries.
• It repealed the ITPA, RTA, RLA, LTA and GLA

OTHER LEGISLATION THAT GOVERN LAND

a) National Land Commission Act, No. 5 of 2012

b) Sectional Properties Act No. 21 of 1987 (repealed by one of 2020)
c) Physical planning Act Cap 286 (repealed by Physical Planning and Land Use
Act of 2019)
d) Valuation for Rating Act Cap 266
e) Stamp Duty Act Cap 480
f) Landlord and Tenants (Shops, Hotel and Catering Establishments) Act Cap
301
g) Rent Restrictions Act Cap 296
h) Law of Contract Act Cap 23
i) The Distress for Rent Act Cap 293
j) Survey Act, Cap 299
k) Valuers Act, Cap 532
l) Trusts of Land Act, Cap 290
m) Environment Management Coordination Act
CLASSIFICATION OF LAND AND PROPRIETARY RIGHTS IN
LAND
CATEGORIES OF LAND RIGHTS AND INTERESTS

Doctrine of Estates

Estates relate to interests in land which are projected on the plane of time and
consequently are capable of being quantified in terms of duration. The idea that
one does not own the land but rather has an interest in it is what underlies the basis
of landholding. An estate is therefore an abstract entity which defines the rights
that the owner has in relation to the land. The characterizing element of the estate
is its temporal nature and length of time.

The doctrine of estates could also be said to have emerged because certain
incidences of ownership can be divided between different people at different
times.
A. Freehold Estates

Freehold Estate is one where the duration cannot be known with certainty at the
outset. The expression freehold derives from the feudal system where there were
free and unfree tenures. It is free of any time limitation. It can be called absolute
ownership. The freehold is mostly the agricultural property in Kenya.

B. Leasehold Estates

The lease was viewed as an arrangement between the landlord and tenant for
exclusive use of the land for a set number of years or less. Leasehold can be of a
fixed term of a certain duration such as a lease of 99 years or a fixed term with a
duration capable of being rendered certain such as where a lease of land to A for
year to year with no other provision as to duration will continue indefinitely unless
either of the parties takes some steps to terminate it.

In Leasehold, government is always considered as the head lessor. The first person
to get the land transferred to them from the government is granted specific period
and conditions to fulfil and will thereafter be allowed to use the said property for
that period of years. That second lessor can transfer their interest in land but no
longer term than that granted by the government.
C. Absolute Estate

The principle of absolute ownership works in 2 ways; it stipulates what interests an

absolute proprietor gets and the rights which he takes subject to:
Remainders and Reversionary Interests

If the lessor fails to apply for the renewal of the lease upon expiry, the government
being the head-lessor of the property, can assign the said lease to any person who
apply to be assigned the said lease.
INTERESTS IN RIGHTS OVER LAND

Section 26 (1) provides that the Certificate of Title issued by the registrar upon
registration shall be taken by all courts as prima facie evidence that the person
named as the proprietor is the absolute and indefeasible owner subject to
encumbrances, easements, restrictions, and conditions endorsed/ contained in the
certificate.
Section 24 (a) of the Land Registration Act states that registration of a person as
the proprietor of land vests in that person the absolute ownership of that land
together with all the rights and privileges belonging or appurtenant thereto.
Under Section 25, the rights of a proprietor whether acquired on first registration
or subsequently for valuable consideration or by an order of the court cannot be
defeated except as provided therein.

An absolute title is however subject to:

i. Leases, charges, and other encumbrances and to conditions and

restrictions if any as shown in the register.
ii. Such liabilities rights and interests that have affected the land and are
declared by Section 28 of the LRA not to require noting on the register
unless the contrary is noted in the register. These are called
overriding interests.

Interests in land may be legal or equitable. Legal rights are created and are
capable of being conveyed at law. Equitable rights are creatures of Equity. English
Law recognized the following as legal rights:

i. Charges and Mortgages

ii. Easements
iii. Rights of entry
iv. Rent charge (lease)

All other interests were considered equitable under English law.

i) Charges and Mortgages

Charges and mortgages are lending transactions designed to provide security for
money advanced by creditors.
A mortgage was defined by Lindlay J in Samtley V Wilde as a disposition of some
interest in land or other property as a security for payment of a debt or the
discharge of some other obligation for which it is given. A mortgage conveys an
interest in specific movable property for the purpose of securing payment of
money advanced or to be advanced.

The conveyance/assignment is conditional on the default by the borrower in that

event that the borrower defaults the mortgage interest in land becomes absolute.
Section 2 of the Land Act defines a charge as an interest in land securing the
payment of money or money’s worth or the fulfilment of any condition and includes
a sub-charge and the instrument creating a charge. A charge designates property
as security for a monetary facility. It does not transfer any interest in the property
S 80(1) LA provides that a charge to operate as security only and not as a transfer
of any interest or rights in land.
Other Rights in Alieno Solo and the Doctrine of Servitudes

The questions of servitudes are closely related to encumbrances in the sense that
they are rights in alieno solo and effectively burdens upon land belonging to
another person. Alieno solo would be Latin for ‘in another’s soil/land.

Various categories of servitudes that are enumerated as follows:

a. Cautions/caveats, Inhibitions, Prohibitions and Restrictions.

b. Easements;
c. Profits á prendre
d. Restrictive Covenants

Leases and Tenancies

Leases are said to be interests conferring a right to land itself as opposed to

interests conferring a right enforceable against the land of another person. In
Prudential Assurance Co. Ltd V London Residuary Body (1992) AC 286 a lease
was defined as “a contract for the exclusive possession and profit of land for some
determinate time” Section 2 of the Land Act defines a lease as follows; “The grant,
with or without consideration by the proprietor of land of the right to exclusive
possession of his or her land, and includes the right so granted and the instrument
granting it and also includes a sublease but does not include an agreement to lease.”
CATEGORIES OF LAND

Article 61 of the Constitution of Kenya 2010 stipulates that all land in Kenya
belongs to the people of Kenya collectively as a nation, as communities and as
individuals. Land is categorized therein as public, community, or private land.
 1. Public Land

Article 62 defines public land to include:

a) Un-alienated government land as defined by an Act of Parliament;

b) Land lawfully held, used or occupied by any State organ – However, this does
not include land that is occupied by the State organ as lessee under a private
lease;
c) Land transferred to the State by way of sale, reversion or surrender;
d) Land in respect of which no individual or community ownership can be
established by any legal process;
e) Land in respect of which no heir can be identified by any legal process;
f) All minerals and mineral oils as defined by law;

Public land is administered by the National Land Commission established by the

NLC Act. It is vested with either the county government or national government in
trust for the general public.
2. Private Land

Article 64 of the Constitution defines private land to be:

a. Registered land held by any person under any freehold tenure;

b. Land held by any person under leasehold tenure; and
c. Any other land declared private land under an Act of Parliament.

Private land therefore is land or property that is held by individuals in the nature
of freehold estate or a leasehold grant from the government. It is possible for
groups of people to own private land.

Private land is also capable of joint ownership and co-ownership as in joint

tenancies and tenancies in common respectively. Property in joint tenancies is
indistinguishable i.e. where two people own property under joint tenancy it is
impossible to divide what shares in the property each one has. Such property will
devolve by way of survivorship.

Tenancies is common is a shared interest with clearly distinguishable portions.

Each tenant may alienate or dispose of their share without affecting the co-owners
tenancy.
3. Community Land

Article 63 defines community land to consist of:

a. Land lawfully registered in the name of group representatives under the

provisions of any law;
b. Land lawfully transferred to a specific community by any process of law;
c. Any other land declared to be community land by an Act of Parliament; and
 d. Land that is—
i. Lawfully held, managed or used by specific communities as
community forests, grazing areas or shrines;
ii. Ancestral lands and lands traditionally occupied by hunter-gatherer
communities; or
iii. Lawfully held as trust land by the county governments,

Any unregistered community land is to be held in trust by county governments on

behalf of the communities for which it is held.
The principal legislation regulating community land is the Community Land Act
No. of 2016.
DEFINE THE SCOPE OF CONVEYANCING
The scope of conveyancing covers the various procedures for certain land
transactions. It deals with practical issues such as how one negotiates and
concludes a lease, charge, transfer or other transaction and how the relationship
between the parties to the transaction is determined. Conveyancing is confined to
conveyance of rights and interests in immovable property. Conveyancing also
includes other procedural matters such as execution, attestation, stamping and
registration of documents. It also involves the construction or interpretation of
documents.

THE MEANING OF CONVEYANCING, CONVEY, CONVEYANCE

AND CONVEYANCER
CONVEYANCING

Conveyancing is generally understood as the transfer of estates and interests in

land by legal process, i.e. the process by which legal title to property is
transferred. Conveyancing is concerned with the legal mechanisms whereby the
ownership of land or of an interest in land is transferred from one person to
another. According to the Black’s Law Dictionary conveyancing is the act of or
business of drafting and preparing legal instruments, especially those (such as
deeds or leases) that transfer an interest in real property. The Law of Conveyancing
is concerned with the legal mechanisms by which an interest in land is alienated
from one person to another. Conveyancing involves more than just drafting and
registering documents. Conveyancing may also involve a simple modification of
title or even an involuntary transfer of an interest e.g. sale by a mortgagee. It may
thus be more appropriate to define Conveyancing as the art or science of
conveying or effecting the transfer of legal property or modifying interest in
relation to property by means of a (written) document.

The types of conveyancing transactions, include the following:

• Sale/Purchase of land
• Lease over land
• Charge over land/mortgage over land.

The players in a conveyancing transaction include the following:

• Vendor/Purchaser, Transferor/Transferee.
• Lessor /Lessee, Landlord /Tenant.
• Chargor/Chargee, Mortgagor/Mortgagee
• Estate Agents.
• The Advocates
 • Financiers
• Valuers, (registered under the Valuers Act)-Valuers have to be surveyors
first; unless exempted by the Board.
• Surveyors (registered with the Land Surveyor’s Board under the Surveyor’s
Act)
• The Land Control Board.
• The Collector of Stamp Duty
• The Land Registrar.
• The Registrar of Companies (For Company Chargors)

CONVEY

As defined in the Oxford Dictionary, to convey is to transfer the title to property.

The definition is quite similar to conveyancing since it involves the transfer of title
from one person to the other. It is the act of alienation of an interest by means of an
appropriate instrument or document.
CONVEYANCER

A conveyancer is defined as a qualified professional, i.e. a lawyer who prepares

documents for conveyance of property. His role is to represent the buyer or
seller or the mortgagor. He/she has to be qualified in line with the Advocate’s Act.
(See National Bank of Kenya Ltd v Wilson Ndola Ayah [2009] eKLR. Generally,
the main work of a conveyancer is to draft, construct documents, and then utilize
the instruments for creating and transferring instruments in land and ensure the
person has a marketable title. Some of the duties generally for conveyancers
include:

- Advising clients on buying and selling process plus effect of transferring an

interest in land
- Investigating title
- Drafting the K with sale details, offers, leases, transfer
- Liaising with lenders, estate agents, Advocates, etc.
- Paying taxes e.g. Stamp duty, land rent, VAT, CGT, Rates
- Keeping records of payments and finally preparing a completion statement
- Perfecting the documentation including proper execution, completion and
registration

CONVEYANCE

Conveyance is defined as document effecting the transfer of property”. In other

words, it is the document used to effect the conveyancing. Section 2 of the Land
Act & Land Registration Act defines an instrument as, ‘any writing, including an
enactment that creates or affects legal or equitable rights or liabilities.’ Examples of
conveyances are:
 • Transfer
• Indenture of conveyance
• Lease
• Assent
• Charge
• Mortgage Easements

CONDITIONS ATTACHED TO CONVEYANCING INSTRUMENTS.

a) FORMALITY OF WRITING IN CONVEYANCING

In order for one to buy land, he/she must enter into a contract with the seller. The
contract must be in writing, executed by both parties and attested. This is a
mandatory statutory requirement as espoused under Section 3(3) of the Law of
Contract Act.

The formality of writing serves three purposes: Evidentiary, Protective and

Forensic

a) Forensic function

The formality of writing performs the forensic (of or used in court of law) function
in providing simple yet conclusive evidence of the fact of agreement. The Statute
of Frauds 1677 expressly provided that the requirement of writing was intended to
guard against the fraud.

b) Evidentiary function

Formality of writing also performs useful evidentiary function in encouraging

precision and recording the result for posterity. Writing helps to avoid disputes as
to what interest has been or is intended to be conveyed. Remember too that land
can generate an array of interests from its original form in the freehold estate.

c) Protective function

The formality of writing performs the protective function of giving parties a chance
to reflect and think on the deal before executing a binding contract that they may
wish so shortly before the ink is dry to renege on. It is stated that if the agreement
was to be oral there would be no time for reflection on the deal per se. This function
has been reinforced further by the requirement of “independent legal advice” to
be given by a qualified conveyance.
b) EXECUTION, ATTESTATION & VERIFICATION

Execution

Execution is the signing of documents the purpose of which is to authenticate and

acknowledge the same. Signature on the other hand is the “writing or otherwise
affixing a person’s name or a mark to represent his name by himself or by his authority
with the intention of authenticating a document as being that of, or as binding on the
person whose mark or name is so written or affixed”.
Attestation/Verification

Attestation is the proper witnessing of a signature or execution. It simply means to

bear witness to a fact. The person witnessing the execution must be present as the
executant ascribes his mark. The object is to help guard against fraud and thus a
party to a deed cannot attest to its execution.
c) STAMP DUTY

As part of conveyancing and taxation, stamp duty is basically revenue raised by

the Government requiring stamps sold by the Government to be affixed to
designated documents. The Stamp Duty Act (Cap 480) Laws of Kenya designates
various conveyancing instruments to be stamped.
d) RATES& RENT CLEARANCE CERTIFICATES

Rates Clearance Certificate

Rates are levies payable to the Government through the local authorities under the
Rating Act (Cap 267) Laws of Kenya. It is simply a form of taxation and
conveyancing helps in a way towards its collection.
Land Rent Clearance Certificate

Land Rent, too, is a source of income for the Government as Landlord. Land Rent
will be levied only on leasehold parcels where the annual rent has been reserved
at the time of the grant being issued.
e) CONSENTS

There are quite a number of consents in conveyancing to ensure the success of a

transaction. Different transactions however require different consents and
occasionally some will over-lap.
1. Consent from the National Government or County Government
(Commission of Lands)

The Registrar shall not register an instrument effecting a transaction unless

satisfied that any consent required to be obtained in respect of the transaction has
been given by the relevant National Government or County Government on the
use of the land, or that no consent is required (section 39(2) of the LRA).This
includes paying all outstanding land rent. It will be applicable only to leasehold
properties and not freeholds.
2. Land Control Board Consent
This applies to all land designated as “agricultural land” under Section 2 of the
Land Control Act (Cap 302) Laws of Kenya and is required for all transactions
touching on and concerning such land. The particular transactions are outlined in
section 6(1) of the Land Control Act.eg. Sale, Charge, Transfer, Lease etc.

The consent is granted by the local Land Control Board on application by both
parties to the transaction. The application is made in a prescribed form and consent
also issued in a prescribed form. The application to the Board must be made within
six (6) months from the date of the transaction otherwise the transaction is null and
void.
3. Other Consents include:
i) 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.
ii) 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 supposed to be given a questionnaire to fill in. One
must consult before doing anything on the land.
iii) 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.
iv) The Consent of Trustee 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.
v) Spousal Consent

Section 93 of the LRA 2012 as read with Section 12 of the Matrimonial Property Act
require the consent of a spouse where the other spouse seeks to dispose
matrimonial land or a dwelling house which that other spouse holds in his or her
name individually. The consent is usually given in the form of an Affidavit. The
consent is usually given in the form of an Affidavit. LSK Conditions of Sale
provides that for purposes of completion, all necessary consent must be obtained
by the vendor/lessor.
f) FORMALITY OF REGISTRATION IN CONVEYANCING
Conveyancing is complete only once registration is affected. Registration is the
keeping of records of land transactions in the Land Register. It involves registration
of both the title and as well as the interest. What is registered is usually the title or
ownership to land and any instrument dealing with land or the disposal thereof.
- Security of tenure: A registered proprietor acquires an indefeasible title
against the whole word. The security of tenure acquired through registration
also gives the property, owner a right to indemnity from the Government
where there is fraud or an error in the Register. See LRA 81-84, but note the
qualification in S. 80(1)
- Reduction of unnecessary litigation: The registered owner can transact or
settle his land without the fear of being sued to challenge his title because
upon registration, he acquires an indefeasible title against the whole world.
- Prevention of re-fragmentation of land: Registration helps to determine
whether or not a particular piece of land can be sub-divided because his
tide details pertaining to the land, such as acreage, will have been noted in
the Register.
- Facilitation of Government property tax administration: Through
registration, the Government is able to identify persons/property owners on
whom to levy tax in respect of a particular piece of land and also keep track
of the Government’s planning programmes.
- Efficient administration and facilitation of the loan system: The security
of title which flows from registration makes it possible for property owners
to obtain loans from financial institutions .A prospective purchaser has more
faith dealing with an owner whose land is registered.
- Prevention of concealed dealings in land: Registration gives publicity to
land transactions. Since the register is a public document and is therefore
open to the public, it is possible to ascertain who owns what interest in land.

Upon registration of the land or conveyance the registered proprietor acquires an

indefeasible title against the whole world. [Section 24 of the Land Registration
Act No.3 of 2012]

Registration is effected at the relevant Land Registries. Care must be taken that the
conveyancing instrument is not only presented at the proper registry but is also
signed/registered by the proper registrar.
Effect of Registration

Pursuant to Section 24 of the LRA the registration of a person as the proprietor of

land shall vest in that person the absolute ownership of that land together with all
rights and privileges belonging or appurtenant thereto; and the registration of a
person as the proprietor of a lease shall vest in that person the leasehold interest
described in the lease ,together with all implied and expressed rights and
privileges belonging or appurtenant thereto and subject to all implied or
expressed agreements, liabilities or incidents of the lease. (See Tulk-v-s Moxhay
[1843-60]All E.R 9)

One becomes an absolute owner of the title or interest registered.

Pursuant to section 25 of the LRA The rights of a proprietor, whether acquired on
first registration or subsequently for valuable consideration or by an order of court,
shall not be liable to be defeated except as provided under the Act, and shall be
held by the proprietor, together with all privileges and appetences belonging
thereto, free from all other interests and claims whatsoever, but subject-

a) To the leases, charges and other encumbrances and to the conditions

and restrictions, if any shown in the register; and
b) Overriding interest (see S.28 LRA)

WEEK 2

1. Key aspects in disposition of Land:

- Execution, witnessing of signatures and verification of

execution.

- Power of attorney,

- Consents; and

- Professional Undertaking.

EXECUTION, ATTESTATION & VERIFICATION

Execution

Execution is the signing of documents the purpose of which is to authenticate and

acknowledge the same. Section 44 (1) of the Land registration Act states that,
‘every instrument effecting any disposition under this Act shall be executed by
each of the parties consenting to it, in accordance with the provisions of this
section.’

Signature is the “writing or otherwise affixing a person’s name or a mark to

represent his name by himself or by his authority with the intention of
authenticating a document as being that of, or as binding on the person whose
mark or name is so written or affixed”. Other than signature, thumbprint or other
mark as evidence of personal acceptance of that instrument is acceptable. [See s44
(2) of LRA]. This is with regards to natural persons. While the execution of any
instrument referred to in subsection (1) by a corporate body, association, co-
operative society or any other organization shall be effected in the presence of
either an advocate of the High Court of Kenya, a magistrate, a Judge or a notary
public [s44 (3) LRA] and shall be executed by means of the company seal affixed
in accordance with the memorandum and articles of association.
Attestation & Verification

Attestation is the proper witnessing of a signature or execution. It simply means to

bear witness to a fact. The person witnessing the execution must be present as the
executant ascribes his mark. The object is to help guard against fraud and thus a
party to a deed cannot attest to its execution. n. A vendor ought not to witness the
Purchaser’s signature and vice versa. Where a company is involved, the company
seal may be affixed and attested by either two (2) directors of the company or
single director and the company secretary.
The Court of Appeal in LamchandFulchand Shah –vs. – I&M Bank Limited
C.A.C.Appl.No. 165 of 2000 decreed that where there is a question of proper or
improper attestation then the Advocate who purportedly witnessed the execution
must be made party to the suit. The conveyancer must thus take care and ensure
the document has been executed in his presence.

In a conveyance document, attestation is evidenced in the attestation clause where

the witnesses sign.
Verification is explicitly provided for under section 45 of the Land Registration
Act. It is however more than just witnessing. A person executing an instrument is
required to appear before the Registrar, Public Officer or other person as is
prescribed; and be accompanied by a credible witness for the purpose of
establishing identity, unless the person is known to the Registrar, public officer or
other person. The Registrar, public officer or other person shall then identify the
person and ascertain whether the person freely and voluntarily executed the
instrument, and shall complete thereon a certificate to that effect.

It therefore becomes incumbent upon the Registrar or the public officer to satisfy
himself as to the identity of the person appearing before him and to ascertain
whether he freely and voluntarily executed the instrument.
POWER OF ATTORNEY
Introduction

This is an authority in writing by which one person (donor) enables another

(attorney in fact or donee) to act for him. Attorney is a person who is appointed
by another and has authority to act on behalf of another. The authority could be
general or special (specific).It authorizes the donee to do some lawful act for and
in the stead of the donor. The authority is contained in a Letter of Attorney and could
be irrevocable or revocable. The done can use the authority to do only what he is
authorized under the Letter of Attorney to do and no more.

It is a general rule that an act done under a power of attorney must be done in the
name of the person who gives a power, and not in the attorney’s name. The power
may be general or specific. The person appointing is known as the principal or
donor. The person appointed is referred to as the donee. A power of attorney
presupposes that the person donating it has capacity.

As such, a person of unsound mind, for example, has no capacity to donate a power
of attorney. Consequently where a person purports that he has a power of attorney
donated to him by a person of unsound mind, as was the case in Grace Wanjiru
Munyinyi & another V Gedion Waweru & 5 others, the power is null in law.

A power of attorney must be executed by the Donor of the Power and thereafter
stamped and registered in the Registers of Powers of Attorney. Stamp Duty is
payable by the donor/executor.
Revocation of Power of Attorney

Power of attorney may be revoked through the following ways:

a) By the donor executing a revocation

b) By performance of the act it was created to perform
c) Expiry of time
d) Operation of the law e.g. when the principal becomes bankrupt, his
power of attorney in relation to property or rights of which he was
divested by the bankruptcy, is revoked by operation of law.

The Execution under Powers of Attorney

Section 48 of the Land Registration Act No. 3 of 2012 makes provisions for powers
of attorney. Pursuant to this section, an instrument dealing with an interest in land
shall not be accepted for registration where it is signed by an agent (other than the
registered proprietor) without a power of attorney.

However, an instrument may be still registered when signed by an agent without a

power of attorney in certain circumstances. These are:
  Under section 48(3) of the Land Registration Act, the guardian of a person
under a legal incapacity or, if there is no such guardian, a person appointed
under some written law is allowed to generally represent that person for the
purposes of the Act without necessarily obtaining a power of Attorney by
way of an application for the same.
 Under Cap 248(Mental Treatment Act) one may apply to manage the
property of an insane person. Such a person need not have a power of
attorney.

PROFESSIONAL UNDERTAKING
Advocates are sometimes called upon to make professional undertakings in the
course of practice where a promise to perform a certain Act on behalf of their client
is expressed to the client or his advocate. An undertaking is defined as an
equivocal declaration of intention addressed to someone who reasonably places
reliance on it and made by an advocate or a member of an advocate’s staff in the
course of practice; or an advocate as “advocate” but not in the course of practice.

Basically, it is a promise by an advocate to do or not to do something. It ought to be

in writing though there is nothing in principle to prevent it from being oral.

An undertaking is personally binding on an advocate whether it was given orally

or in written form. Also noteworthy is the fact that professional obligations may
accrue even though the advocate has not made an undertaking say where a person
deposits documents to an advocate under escrow to be held subject to a
professional obligation to return the same in the event that the condition under
which such documents are held is not fulfilled.

There is no duty on the advocate to give or accept an undertaking. Whereas the

advocate has a duty to act in his client’s best interest, this does not imply a duty to
underwrite a client’s financial or other obligation. However, the giver of an
undertaking cannot unilaterally withdraw from it one reliance has been placed on
it by the recipient.
It places both a legal and ethical obligation on the giver. In Peter Ng’ang’aMuiruri
vs. Credit Bank & Charles Nyachae t/a Nyachae& Co. Advocates (Civil Appeal
No. 263 of 1998-Court of Appeal Nairobi)- the Court held that an undertaking is a
solemn thing, in enforcing it the Court is not guided by considerations of contract
but the Court aims at securing the honesty of its officers. The Kings Bench Division
of the English High Court in the case of United Mining and Finance Corporation
Ltd v Beecher, stated:

‘…the court does not interfere merely with a view of enforcing contracts on
which actions might be brought, in a more speedy and less expensive mode;
 but with a view to securing honesty in the conduct of its officers, in all such
matters as they undertake to perform.’

It important to note that an undertaking usually attaches only to the giver of the
undertaking and only the recipient may complain of its breach. Law Society of
Kenya “Digest of Professional Conduct and Etiquette” provides that an
undertaking shall be in a form which is clear and once accepted by an Advocate
shall bind him or his firm to the undertaking and any breach thereof shall constitute
professional misconduct. In Naphtali Radier vs. D Njogu & Co. Advs. the Court
held that an advocate is obliged by law as an officer of the Court to honour his
professional undertaking. Failure to honour= professional misconduct.

An undertaking by an advocate is subject to supervision by the Court, the breach

of which amounts to professional misconduct which is enforceable in Court for
breach of contract. Professional Undertakings are based on mutual trust. The
concept of implied undertakings as known in common law also applies e.g. to
return documents held should registration fail. Care should be taken in responding
to requisitions such that sufficient particulars of the specific charges or mortgages
the subject of a Professional Undertakings should be given.
Ingredients of a Professional Undertaking

- Unequivocal declaration of intention by an advocate

- Addressed to someone
- Places reliance on it
- Made personally by an advocate in the course of practice or as an advocate
or by a member of staff

Enforcement of Professional Undertakings

Once it is determined that an undertaking exists and the same has been breached
the recipient has the following options jointly and severally:

i. Co-operation with the undertaking party e.g. extending time

ii. Seeking enforceability through Court action –O 52 of CPR through an
Originating Summons
iii. Undertakings can be enforced even if one is not the recipient. [See KCB v
Mohammed Muigai Advocates (HCC757 of 2003)]

WEEK 3

1. Stamp Duty and Exemption of Stamp Duty

2. Capital Gains Tax and Capital Gains Tax Exemption

3. Clearance certificates.

4. Land rent and rates.

STAMP DUTY AND EXEMPTION OF STAMP DUTY
INTRODUCTION

Land has always been a source of revenue for the state. The purpose of land
taxation is to provide a stable fund for land banking, land servicing, and facilitating
efficient utilization of land. As part of conveyancing and taxation, stamp duty is
basically revenue raised by the Government requiring stamps sold by the
Government to be affixed to designated documents.
The Stamp Duty Act (Cap 480) Laws of Kenya designates various conveyancing
instruments to be stamped. Section 5 of the said Act demands that every instrument
relating to property in Kenya, if specified in the Schedule to the said Act; do fetch
stamp duty as prescribed. The duty is to be paid within 30 days of execution of the
document or of its receipt if it is executed outside Kenya (Section 6).

Failure to pay duty is equivalent to evasion of tax and is a criminal offence under
Section 113 of the Act. Section 46 of the LRA supplements the Stamp Duty Act and
under the Section no document is acceptable for registration if the stamp duty
required to be paid has not been duly paid and documents properly stamped.

Duty on conveyancing instrument is paid on the ad valorem value at the statutory

rate. The rates currently are
• Transfers 4% for properties situate within cities, municipalities and 2% of
the value for properties outside municipalities/cities;
• Charges and Mortgages – 0.1% of the amount secured;
• Discharges/Re-conveyances- 0.05% of the amount secured
• Leases 1% of the annual rent for a Lease of less than 3 years and 2% of the
average rent for a Lease of 3 years or more. Long term Leases or subleases
are deemed to be Transfers and fetch duty as if they were Transfers.

Currently, Stamp Duty Fees is collected directly by the Kenya Revenue Authority
by payment being made to the Authority’s account in commercial banks. The
document together with the stamp duty assessment form and the banking pay-in
slip is then delivered for stamping by the Collector of Stamp Duty. The Collector
has powers to adjudicate and decide whether a document should fetch duty.
Payment is processed through iTax.

It is important that in every conveyancer’s brief; the Stamp Duty Assessment Form
obtained from the Collector of Stamp Duty is completed in a legible manner, the
payment is re-checked to have been fully made to match the amount assessed, all
receipts are available copied and properly filed and any certificated for purposes
of relief or exemption required are obtained in time.
EXEMPTIONS OF STAMP DUTY
Exemption from payment of stamp duty is however the recluse of the CS for Finance
after receiving the appropriate recommendation from the CS for Lands [See
section 106].
Section 117 of the stamp Duty Act lists the following exceptions from stamp duty:

• An instrument executed by or on behalf of or in favour of the Government

in any case in which, but for this exemption, the Government would be liable
to pay the duty;
• An instrument for the sale, transfer or other disposition, either absolutely or
by way of mortgage or otherwise, of a ship or of any part, interest, share or
property of or in a ship;
• Instruments for the sale or transfer of land for the construction or
expansion of educational institutions:
CAPITAL GAINS TAX AND CAPITAL GAINS TAX EXEMPTION
INTRODUCTION

Capital Gains Tax is a tax that is levied on transfer of property situated in Kenya,
acquired on or before January 2015. It imposes a 15% tax on net gains on the
‘transfer’ of property situated in Kenya. The tax is applicable on net gains on
transfer of any property or stock where the transfer value is 20% or more of the
original value. It is declared and paid by the transferor of the property.

What is a ‘transfer’ for the purposes of Capital Gains Tax?

• Sale, exchange, conveyance or disposal of property in any manner

including gifts.
• If property is lost or destroyed whether or not compensation is received.
• If the property is abandoned, surrendered or forfeited, including the
surrender of shares or debentures on the dissolution of a company.

What is not considered to be a ‘transfer’?

• Transfer of property for the purposes of securing a debt or transfer by a

creditor of property used as security.
• The issuance by a company of its own shares or debentures.
• Transfer of a deceased’s property to the personal representative;
• Transfer by a personal representative of a deceased’s property to the
deceased’s heirs or beneficiaries of the estate in the course of the
administration of the estate.
• Vesting of a Company’s property in the liquidator by an order of the court
during winding up.
• Vesting of property in the Official Receiver or Trustee in Bankruptcy.
• Transfer of property to a beneficiary by a trustee subject to a trust.

Allowable expenses for the purposes of CGT include;

• Loan/Mortgage interest
• Cost of advertising to find a buyer
• Costs incurred in valuation of the property
• Legal fees
• Costs of enhancements.

EXEMPTIONS ON CAPITAL GAINS TAX

i) Income that is taxed elsewhere as in the case of property dealers.

ii) Transfer of property for the purpose only of securing a debt or a loan
iii) Transfer by a creditor for the purpose only of returning property used as
security for a debt or a loan.
 iv) Transfer by a personal representative of any property to a person as
beneficiary in the course of the administration of the estate of a deceased
person.
v) Transfer of assets between spouses;
vi) Transfer of assets between former spouses as part of a divorce settlement or
a bona fide separation agreement;
vii) Transfer of assets to immediate family;
viii) To a company where spouses or a spouse and immediate family hold
100% shareholding;
ix) A private residence if the individual owner has occupied the residence
continuously for the three-year period immediately prior to the transfer
concerned.

RATES& RENT CLEARANCE CERTIFICATES

Rates Clearance Certificate

Rates are levies payable to the Government through the local authorities under the
Rating Act (Cap 267) Laws of Kenya which is designed to provide for the imposition
of rates on land and buildings in Kenya. Rating is generally levied under the Act to
meet all liabilities falling to be discharged out of the general rate fund, the county
fund or the ownership rate fund as the case may be, for which provision is not
otherwise made. It is simply a form of taxation and conveyancing helps in a way
towards its collection. Upon full payment of rates due on any parcel of land, the
local authority’s Clerk issues the owner of the parcel with a Rates Clearance
Certificate. It is prima facie evidence that the rates due and any interest accrued
thereon have been fully paid.
Section 38 of LRA require that prior to the Registrar accepting any document
intended to transfer or vest any interest in land for registration there must be also
produced a valid Certificate or Statement showing that the rated have been cleared
or paid up. Rates will be levied on all parcels of land, freehold or leaseholds.

This is issued by the appropriate local authority in whose area the land is situated.
It certifies that all monies payable to the local authority in respect of that property
have been paid. Such monies include:

i) Land Rates
ii) Interest charges on rates and
iii) Unpaid water bills.

Land Rent Clearance Certificate

Land Rent, too, is a source of income for the Government as Landlord. Land Rent
will be levied only on leasehold parcels where the annual rent has been reserved
at the time of the grant being issued.
Section 39 of the LRA helps to assist the Government in collection of rent as the
section require that before any transaction on a leasehold property is registered
the parties must produce to the Land Registrar a valid Rent Clearance Certificate.
It is always the duty of the registered proprietor to pay and obtain the Rates and or
Rent Clearance Certificate, unless agreed otherwise.

All leaseholds from the Government are subject to annual rent that is payable by
the grantee of the lease. Before registering a transaction involving leasehold land,
the grantee must show that all land rent has been paid to the Government. E.g.
before registering a transfer (of a leasehold interest), the vendor must obtain a
Land Rent Clearance Certificate which is a document certifying that all land rent
due has been paid.

WEEK 4

1. Investigation of title.

2. Registration.
INVESTIGATION OF TITLES
INTRODUCTION

Investigation of title is the means by which the buyer ensures that the seller does
own the land and can convey it. Investigation of title, therefore, entails, inter alia,
checking whether the title is freehold or leasehold, whether it is a current
reference number or not. This ensures that one does not deal in the wrong land.

Investigation of title is done due to the doctrine of caveat emptor and in order to
ascertain the validity of the title. Investigation of title is done by way of:

- Conducting a search
- Pre-contract inquiries and requisitions

1. SEARCH

A search is usually carried out at the lands registry to establish the veracity/validity
of title. Where the seller is a company, it is important that a search is done on the
company at the company’s registry. The search will confirm if the company has the
power to sell the property under its constitution (i.e. Memorandum and Articles of
Association). The company search could also establish whether the company is
being wound up, which could prevent the company from contracting to sell the
property, as this will be deemed to be fraudulent.

A well done search is expected to establish at least the following:

• Land reference number/details of the ownership

• The owner/proprietor
• Registration particulars
• The land tenure; freehold/ leasehold
• The size of the land
• Rent/ rates payable
• Any special conditions in leasehold
• Presence of any encumbrances e.g. charges and any other burdens on the
land
• Presence of any burdens i.e. covenants imposed on the Land.

An investigation of title or search may be carried out either personally or officially.

a) Personal Search

Personal search is undertaken by the purchaser or his Advocate by simply visiting

the registry and personally examining the register. The advocate doing the search
takes personal responsibility for what he purports to find.
At the registry, a person intending to do a personal search pays the prescribed
fees, requests for the parcel documents then inspects the same and takes notes.
b) Official Search

An official search is undertaken by the officials at the registry, and is advantageous

than a personal search because it enjoys a state guarantee. This is because official
searches reflect a true copy of the register. For an official search to be undertaken,
the purchaser or intending purchaser or his advocate must pay the prescribed fees
and apply in writing for an official search to the Land Registrar. The Land Registrar
then conducts the search and issues a certificate of official search. The certificate
in favour of a purchaser or an intending purchaser is, according to its tenor,
conclusive. Since the search is conducted by Government officers, the government
can be held responsible for whatever they purport to find.

Official search is undertaken by the officials at the Land Registry.

• The requisite forms are filed and fees paid in applying for an official search.
• The Land Registrar will conduct a search on behalf of the Applicant and issue
a Certificate of Official Search.
• Unlike a personal search, the state guarantees an official search and one can
be indemnified for damages suffered as a result of relying on the
search.(Section 81 LRA)

2. PRE-CONTRACT INQUIRIES AND REQUISITIONS

Pre-contract inquiries directed at the Vendor, intended to elicit information on

matters not covered by a search but relating to the physical condition of the
property. They are also known as preliminary inquiries. Worth noting is that the
seller or his advocate is not bound to answer the inquiries. The inquiries will vary
from transaction to transaction, but may include:

• Ownership of all the boundary walls and fences as well as repairing

responsibility if this differs from ownership
• Any past or present disputes concerning the property
• Notices affecting the property
• Electricity and water supply and status of their payments
• If there are any shared facilities, like parking
• Any occupiers of the property.
• Any fixtures and fittings and if they are included in the sale. Fixtures are
deemed included in the sale, but fittings are not, unless expressly agreed.

Requisitions are objections or queries to the title that come about from inspecting
the title. They are directed at the Vendor’s advocate, and are merely technical
questions because they require the Vendor to remove the defect or doubt revealed
on the examination of the title.
The LSK Conditions of Sale anticipate that requisitions are made during the
contractual stage, but it is advisable that this is done before any contract is signed
and deposit paid. Answers to requisitions ought to be availed within a reasonable
time

If within the contractual stage, as anticipated in the LSK conditions of Sale 2015,
requisitions must be answered within 14 days, failure to which the purchaser may
rescind that agreement.
REGISTRATION
INTRODUCTION

The law of conveyancing serves the interests of the society when it is capable of
not only facilitating the transfer of land but also when it can provide security of title
upon such a transfer. In a nutshell, conveyancing law must facilitate the transfer of
land by easing the burden on purchasers without defeating the interests of others
unfairly. This is in practice carried out through the registration and investigation of
titles and documents.

Registration is a process of recording interests in land so as to facilitate

ascertainment of these interests through searches for effective conveyancing.
Once carried out, registration has the effect of passing an interest in land from one
party to another. It is vital that the transfer of interests of these persons in or over
the land in question be protected upon the transfer of that land
THE GOALS OF REGISTRATION

i) Security of Tenure

Security of tenure gives one a right to indemnity from the government. It is the
security of the transferee, chargee and the mortgagee. It flows from the fact that a
purchaser of a piece of land from a proprietor on the register should have the
commercial confidence in the transaction unbothered by the deficiency of title not
revealed in the register.

Security of tenure is also guaranteed by the conclusiveness of the register. No

claim, which is inconsistent with a registered title, can be enforced against the
owner of the interest. A person who has acquired title from registered proprietor
has acquired an indefeasible title against the whole world.
ii) Reduction in Litigation

During the process of registration, the size and owner of a land parcel are
conclusively established or determined. Once registration has taken place any one
may transact or settle on the land without any fear of being sued.
iii) Preventing Fragmentation of Land

Registration of land prevents the unreasonable and unnecessary subdivision or

fragmentation of land especially of agricultural land.

For this reason, an individual requires the permission of the Land Control Board for
any sale or subdivision or any dealing with regard to agricultural land. This is so
pursuant to the provisions of the Land Control Act No. 34 of 1967
iv) Facilitation of Tax Administration
Registration enables the Government to identify a person against whom to levy a
tax or a rate regarding a land parcel. This flows from the fact that because land
transactions must be registered, the Government is able to follow up a sale of land
and tax it.
v) Administration of Loan System

Security of title makes borrowing of money an easy task, as the moneylender i.e. a
bank, is quite happy to advance money on a secure title. This facility helps
proprietors to secure capital for the development of land.
REGISTRATION SYSTEMS

These registration systems are the registration of deeds or documents and

registration of titles.
a) Registration of Deeds/Documents

Under the registration of deeds, a public register is kept in which documents

affecting interests in land are copied or abstracted. Consequently, it is the
document or the deed that is registered and not the title. The document that is
referred to here is the document/deed evidencing the disposition of an interest in
land. Accordingly, in registration of documents, it is the document that proves title
and not the register, as is the case under registration of the title system discussed
hereunder. The registration of documents is largely a province of the following
Acts: Registration of Documents (Cap 285) and Land Registration Act, 2012.
b) Registration of Titles

The system that is rapidly superseding the registration of documents/deeds

highlighted above is the system of title registration. Under this system, a register
of titles serves as an authoritative record of the rights to clearly defined units of
land as vested for the time being in some particular person or body, and of the
limitations if any, to which these rights are subject.

The registrable transactions are thus registered against each title document kept
in the registry and a memorandum thereof is endorsed on the register and on the
grant/certificate issued to the proprietor.

Save for overriding interests, all the material particulars affecting the title of the
land are fully revealed merely by a perusal of the register which is maintained and
guaranteed by the State.

The register is at all times the final authority and the State accepts responsibility
for validity of transactions, which are affected by making an entry in the register.

Thus land certificates are issued for absolute proprietorships and certificates of
leases for leaseholds.
Advantages of Registered Titles

a) Registration of title gives finality and certainty by providing an up-to-date

official record of land ownership. The need to examine the past history of
the title on each successive transaction is thus eliminated.
b) A registered title is guaranteed because there is express provision for
indemnity should any person suffer loss through any error in or omission
from the register.
c) Registration can cure defects in title which, may, up to the time of first
registration, have been the subject of recurrent conditions of sale and
enquiries. In addition, many unregistered titles have been successfully re-
established by registration after the title deeds have been lost or destroyed.
d) For each title there is provided an official plan which clearly identifies the
extent of the registered land.
e) The proprietor of registered land (when it is not in mortgage) is issued with
a land certificate which contains a copy of the entries in the register and of
the official plan identifying the land.
f) Registration of title eliminates the need for the deduction by the vendor and
the examination by the purchaser of proof of ownership originating from a
satisfactory root of title.

The Law on Registration of Documents

The process below entails the procedure of the registration of documents:

i) Document is delivered to the Registrar for assessment of fees

ii) An official receipt is paid for and issued for the document by the is issued or
in case of Registration Revenue stamps,
iii) Document is presented in Registry where it is allocated a Day Book number
in order of first come, first in priority
iv) Document is investigated to determine its suitability for registration. If
unsuitable, it is rejected. If suitable, entries are made but in case of transfer,
itis first referred to valuation
v) Registrar checks the entries and signs either the rejection or the registration
entries.
vi) The rejected document or copies of registered Document is dispatched to
the presenter of the documents.

Registration under the RDA (Cap 285)

Section 4 of the Act outlines the documents which must be registered compulsorily
under the Act. Principally, any document conferring or purporting to confer,
declare, limit or extinguish any title, right or interest in or over immovable
property must be registered.
Pursuant to Section 5, any other document may be registered at the option of the
person so holding it. Examples of such documents are deed polls, wills, and plans.
EFFECT OF REGISTRATION

Absolute ownership

Section 24 (a) of the Land Registration Act states that registration of a person as
the proprietor of land vests in that person the absolute ownership of that land
together with all the rights and privileges belonging or appurtenant thereto.
Under Section 25, the rights of a proprietor whether acquired on first registration
or subsequently for valuable consideration or by an order of the court cannot be
defeated except as provided therein.

An absolute title is however subject to:

iii. Leases, charges, and other encumbrances and to conditions and

restrictions if any as shown in the register.
iv. Such liabilities rights and interests that have affected the land and are
declared by Section 28 of the LRA not to require noting on the register
unless the contrary is noted in the register. These are called
overriding interests.

Section 26 (1) provides that the Certificate of Title issued by the registrar upon
registration shall be taken by all courts as prima facie evidence that the person
named as the proprietor is the absolute and indefeasible owner subject to
encumbrances, easements, restrictions, and conditions endorsed/ contained in the
certificate.
Obiero v. Opiyo [1972] E.A. 227 was decided under the Registered Lands Act
regime. In that case, the plaintiff had been registered as the absolute proprietor of
the title in question in 1968 and in the register no encumbrances were noted. The
defendants who were sons of the defendant with the co-wives conceded that they
had always been in possession of the suit property and they based their ownership
purely under customary law. In a bid to bolster their case they argued that they
had always worked the land since time immemorial and argued that the plaintiff
the first wife registration in their view was obtained by way of fraud to the extent
that the plaintiff never revealed their interest during the registration process. That
sort of argument did not persuade the court and the court in its findings held that
even if the registration had been procured fraudulently, the plaintiff’s title of first
registration was indefeasible and the plaintiff’s title was subject to no
encumbrances as the register reflected none and accordingly the title was free
from all interests and claims and finally the court found that the rights of occupation
inherent in the defendants which in any case arose under customary law were not
overriding interests within S. 30 of the RLA and the court further held that such a
right of occupation had been extinguished upon the first registration with the
plaintiff emerging as the absolute proprietor of the suit property and in granting
the plaintiff the relief sought i.e. damages for trespass and a permanent injunction
to restrain the defendants from continued trespass the Judge had this to say “rights
arising under customary law are not among the interests listed in S. 30 of the Act as
overriding interests. Had the legislature intended that the rights of a registered
proprietor were to be subject to the rights of any person under customary law,
nothing could have been easier than for it to say so.”
 WEEK 5

1. Drafting stages in Conveyancing.

2. Conveyancing procedure and instruments.

STAGES IN CONVEYANCING
The Pre-Contract Stage-which takes place before the parties to a conveyancing
transaction enter into a valid contract.
• The Contract Stage-This is the stage the parties enter into a valid contract usually
in the form of an Agreement.
• The Completion Stage-This is where parties usually exchange the purchase
price with what is known as Completion Documents and Possession of the property.
However, as we shall see later, the manner of the completion will vary depending
on whether it is a cash purchase or financed purchase.
• Registration/Transfer Stage-This is where the conveyance instrument (whether
Transfer, Lease, Charge etc.) is registered.

A. THE PRE-CONTRACT STAGE

Generally, the pre-contract stage entails the taking of instructions from the client
by the Advocate/Conveyancer; and the investigation of title/due diligence.
TAKING OF INSTRUCTIONS AND OTHER INITIAL MATTERS

Taking on instructions from the client entails interviewing the client. Interview is
important as it serves to instil confidence in the client of your abilities as a
conveyancer. The interview will enable you to extract relevant information for use
in the transaction.

This stage also includes client care, advice on costs and finance and advice on
survey. At times, clients will have used an Estate Agent to source for buyers or
sellers of property. Estate Agents are regulated by the Estate Agents Act, Cap
533. Under Section 2 (1) of the Act, an Estate Agent performs the role of bringing
together, or taking steps to bring together, a prospective Vendor, Lessor or
Lender; and a prospective Purchaser, Lessee, or Borrower, and/or negotiation the
terms of sale or letting as an intermediary between or on behalf of either the
principals.

On client care, caring for client needs is always of paramount importance to a

competent conveyancer.

The practitioner should also ensure that where the client is not happy with service,
he knows how to make a complaint and that all complaints are dealt with promptly
and fairly. The practitioner should also advise the client on the necessary steps in
transactions, as well as the timelines, and when next he will contact the client.

The relevant client ease information, including costs should be confirmed to the
client in writing. On advice on costs and finance, the practitioner should advice the
client on the estimate costs, including his legal fees for his services. The costs
would include the legal fees and VAT, search fees, clearance and consent fees,
Stamp Duty, Land Registry Fees, Bank Charges and all disbursements/sundry
expenses. These costs will remain tentative/estimate until the actual transaction is
carried out.

Therefore, in order not to bind yourself on a tentative figure, you ought to inform
your client that you reserve a right to increase your charges should the transaction
become unforeseeably complicated or protracted. You ought to confirm in writing
the estimate costs to the client.

On finance, the practitioner ought to advise the client on the deposits payable on
the purchase price, and borrowings to finance the transaction. On or before
entering into a Land Sale Agreement, a deposit of 10% of the Purchase price is
usually payable by the purchaser, unless otherwise agreed by the parties
(Condition 2(1) (m) of the Conditions of Sale 2015). There are situations where
the purchaser borrows from a financier to pay a balance of the Purchase Price. In
such a situation, you need to advise the client (if purchaser/borrower) on the
additional cost implication (fees for the financier’s lawyer, costs on consents of the
charge, bank value’s fee, Stamp Duty on charge, land registration fees for the
charge and disbursements/sundry expenses).

The Advocate should also touch on taxation i.e. capital gains tax.

On advice on survey, you should always advise your client to have a survey of the
property carried out before entering into the Contract. This is because of the caveat
emptor principle (let the buyer beware) which is to the effect that the buyer alone
is responsible for checking the quality and suitability of the property before
purchase. It is for the purchaser to discover any physical defects in the property
and this may not be apparent from his own inspection, and as such he needs a
surveyor to assist. A physically defective property may be unsafe for occupation
which has financial implication for the purchaser in that:

- The market value may reduce and he may be paying more than he should
for it.
- It may also affect the Purchaser’s chances of qualifying for financing of the
Purchase Price.

INVESTIGATION OF TITLES
INTRODUCTION

Investigation of title is the means by which the buyer ensures that the seller does
own the land and can convey it. Investigation of title, therefore, entails, inter alia,
checking whether the title is freehold or leasehold, whether it is a current
reference number or not. This ensures that one does not deal in the wrong land.

Investigation of title is done due to the doctrine of caveat emptor and in order to
ascertain the validity of the title. Investigation of title is done by way of:

- Conducting a search
- Pre-contract inquiries and requisitions

3. SEARCH

A search is usually carried out at the lands registry to establish the veracity/validity
of title. Where the seller is a company, it is important that a search is done on the
company at the company’s registry. The search will confirm if the company has the
power to sell the property under its constitution (i.e. Memorandum and Articles of
Association).

An investigation of title or search may be carried out either personally or officially.

4. PRE-CONTRACT INQUIRIES AND REQUISITIONS

Pre-contract inquiries directed at the Vendor, intended to elicit information on

matters not covered by a search but relating to the physical condition of the
property. They are also known as preliminary inquiries.
Requisitions are objections or queries to the title that come about from inspecting
the title. They are directed at the Vendor’s advocate, and are merely technical
questions because they require the Vendor to remove the defect or doubt revealed
on the examination of the title.
NOTE: The pre-contractual stage of Investigation will be discussed further with
more details.

B. CONTRACTUAL STAGE IN CONVEYANCING

Creation or transfer of an interest in land is often preceded by a contract i.e. a
contract for the sale of land usually precedes the conveyance of the interest in land
to the Purchaser. Similarly, a contract for Lease may be made first, and then
followed on a later date by a formal grant of the terms of years in the form of a
Lease. Also, an owner of land may contract to create an interest in it, such as an
easement or a charge, the actual creation of the interest to follows later.
WHY CONTRACT?

i. It deals fully with the matters that must be dealt with between the date of the
contract and completion; crystallizes the position of the parties;
 ii. It binds the parties to the sale, prevents last minute withdrawal by either
party and facilitates completion;
iii. It provides for the resolution of any disputes that may arise between the date
of the contract and completion;
iv. It provides remedies for breach;
v. It gives the purchaser time to investigate the title;
vi. The equitable doctrine of conversion is applicable to these kind of contracts
(doctrine of conversion gives rise to equitable ownership on signing the
contract);
vii. It makes the transaction enforceable. S 3(3) of the Law of Contract Act.

CONTRACT FOR SALE OF LAND

Contained in an agreement for sale. Contract for the sale of land must strictly be in
writing. The insistence on written documents such as contracts protects the original
parties from ill-thought transactions that they may regret later on. Third parties are
also protected. In view of the above, section 3(3) of the Law of Contract Act
explicitly states that a memorandum of a disposition in land must in writing.
TERMS

It is open for the parties to make a contract as they deem fit. In practice certain
standard forms of conditions have been settled on. The Law Society Conditions
of Sale (1989 edition) outlines various terms and conditions for the sale of
property.
SALE AGREEMENTS

It has been stated that the vendor becomes the trustee for the purchaser between
the time of execution and completion of the sale agreements.

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. Sale Agreement should not include irrelevancies.

The agreement must comply with any statutory requirements. These include:

- The Law of Contract Act (s.3)

- Land Act and Land Registration Act

A sale and 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 (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.

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.
CONTENTS OF A SALE AGREEMENT

1. Parties

2. Parties of Sale

3. The General Conditions

4. The Special Conditions

5. Execution
a) Parties

This is self-explanatory. The parties to the contract as well as their addresses must
be properly stated in the contract. The address is crucial in the event that there will
be need to issue a notice to either party. It is important that the parties to any
contract are properly identified.
b) Particulars

This entails a description of the subject property. Both the physical and legal
description of the property are given in the particulars of sale. Encumbrances, if
any also constitute part of the property definition. Occasionally, fixture and fittings
will form part of the particulars of sale. Finally the consideration (purchase price)
will be part of the particulars.

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 then
balance of the encumbrance/loan. Avoid allowing the clause “sold subject to all
encumbrances…”
c) Special Conditions

These are those terms which are peculiar or specific to and relevant to the contract
in question. They will involve issues of vacant possession, deposit, fixtures and
fittings, remedies in the event of default, contact being subjected to a mortgage
facility, variation of general conditions, etc.

They 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.
d) General Conditions

These are terms which in the absence of any specific terms apply generally to the
open contract. They came from implied terms which have been complied together
from statute, common law, equity, LSK Conditions of Sale and Conveyancing
practice generally. The general conditions apply also to fill up gaps in a contract
and cover a variety of matters e.g. regulating right to rescind, preparation and
content of transfer, possession and grant, deposit and forfeiture, notices and
completion. The sale Agreement will always be drawn by Vendor’s Advocate (See
Salim-vs-Okongo, 1976 KLR 42, LSK Condition 24)

C. COMPLETION AND TRANSFER

Introduction

Completion is the process in a conveyancing transaction where necessary

documents of title are handed over in exchange for the price. After investigation of
titles and execution of the sale agreement, the next and final stage is the
completion and transfer.

The sale agreement is an executory document and interest in the land has to be
formally transferred by stamping and registering a transfer or conveyance. Prior
to registration, the vendor expects to be paid consideration, while the purchaser
expects to be given all the registrable documents.
The 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 and balance of the purchase price)

4. The obligations of either parties at completion

Prior to completion, the purchaser’s advocate will have prepared a

transfer/conveyance document. In order to do this it is important that he
identifies the document to be drawn. Transfer is drawn by the Purchaser’s advocate
and forwarded to the Vendor for approval. The Transfer causes the disposition
once registered. The form taken by a transfer or conveyance deed depends on:

- Statute under which the property is registered (now all under LRA)
- The interest being conveyed or transferred
- Statute
- Transfer document (pre-2012 and post-2012)

LRA Transfer Forms are prescribed under the Land Registration Regulations 2017,
the take the form under RLA since the LRA largely borrows from RLA. Usual one is
form LRA 33 Transfer of Interest in Land.
DATE OF COMPLETION

The date may be agreed expressly by the parties and inserted in the contract.
When it is an open contract (one that only states parties, price and property) or the
date is not stated in the agreement the completion ought to take place within a
reasonable period of time.
The Law Society of Kenya Conditions of Sale 1989, Condition 2 however had
gone further to provide for a 42 day completion period where no date is provided.
If it’s a Controlled land then completion is 42 days after Vendor’s receipt of
consent. If not controlled then 42 days after date of contract.
However, the LSK Conditions of Sale 2015 provide in Condition 8.1.1 that the
completion date shall be the 90th day after the date of the agreement. The period
before the date of completion is important to both parties as it is during this period
that they satisfy their contractual obligations or prepare to satisfy the same.

It must be noted that the completion date or period if there is any delay may be
mutually extended. Where however the parties provide that the “time is of the
essence” then the completion date must be strictly adhered to. Failure to complete
in such a case will be deemed a fundamental breach of contract both at law and in
equity. The party at fault will not enforce the contract specifically but the other
party is free to pursue his remedies for breach of contract including specific
performance. He may elect to rescind the contract the very next date if he chooses.
Ordinarily time is only regarded as of the essence if the parties make it as
expressly as a term in the contract. Occasionally however the courts, at least in
England have not hesitated to make time of the essence by necessary implication.
Thus in:
In the Kenyan case of Sagoo Vs Dourado 1983 KLR 365 the Court of Appeal
however held that time will not be considered to be of the essence in any contract
unless

i) Parties expressly stipulate that conditions as to time must be strictly

complied with
ii) Nature of the subject matter show that time should be of the essence
iii) A party subjected to unreasonable delay gives notice to the other making
time of the essence

It is a matter of construction of the contract and one may as well argue that S. 3(3)
of Cap 23 would bar such interpretation which invites implications. When time is
not of the essence failure to complete on the agreed completion date does not
entitle the aggrieved party to decline to proceed with the contract.

But what of unreasonable delays despite requests to complete? [See Madan J.A in
Njamunyu Vs Nyaga 1983 KLR 282 where together with the other Court of Appeal
judges, the late Madan seemed to suggest that the provision as to time being made
of the essence can actually be implied. This should really allow rescission.
However, it appears from the line of authorities that in the absence of undue or
unreasonable delay one would still be entitled to specific performance even if he
is the guilty party.
In such instances the aggrieved party needs to give a Completion Notice which
must be proper and explicit. The Law Society of Kenya Conditions provide for this
(Condition 4). Where the Notice is not needed then one is entitled to rescind as
the Notice itself now imposes the “time is of the essence” condition. A proper
Completion Notice will constitute reason for the alleged breach and demand that
it be made good within the notice period and further that in default Agreement will
be rescinded forthwith upon expiry of the Notice. To be effective too, the Notice
must limit a reasonable time for performance. The Notice must also leave no room
that the Server may still be willing to perform the contract if there is still a failure
to complete. Of course to be effective the Server must himself be ready able and
willing to complete in which event the time is also of the essence for him.
[Reflection: Will a notice given in anticipation of breach be good?]
FAILURE TO COMPLETE

• Either the vendor or purchaser may fail to complete (i.e. on the completion date).
Time should be of the essence.
REMEDIES

If offended party is vendor, he can:

a) Go for specific performance thus precluded from forfeiting the deposit;

b) He can also seek damages (usually calculated as the difference between
market price and the contract price);
c) rescind the contract;
d) forfeit the deposit;
e) treat the contract as repudiated;
f) resell the property and recover his expenses and loss from the resale

• If the offended party is the buyer, he may:

i) Take out proceedings for specific performance;

ii) Rescind the contract;
iii) Sue for refund of deposit;
iv) Seek damages for non-performance (difference in value between contract
price and the market price), interest, costs including legal costs and
expenses of searches etc.

NOTICE OF COMPLETION

Under condition 4 of LSK Conditions of Sale, 2015, the aggrieved party needs to
give an unequivocal notice, the Notice should explain the alleged breach and
demand that it be made good within the notice period as per the agreement and
that in default. The agreement will be rescinded upon expiry of the notice.

Once ready to complete, the parties sign the conveyance and deliver the
completion documents at the completion meeting. Usually, completion documents
comprise of:

a. The Original Title documents;

b. Transfer duly signed by the vendor
c. Land Rent Clearance Certificate; (For leasehold Titles only)
d. Land Rates Clearance Certificate; (For Municipal / urban properties of both
a leasehold and freehold nature provided a local government authority has
levied land rates on the property);
e. Relevant consents applicable to the Transfer. i.e
f. Consent of the Commissioner of Lands to leasehold interests;
g. Consent of the Land Control Boards for Agricultural land obtained in
pursuance of the Land Control Act Cap 302 of the Laws of Kenya;
h. Consent of any chargee or Mortgagee having an interest in the land;
i. Consent of any statutory authority having an interest in neighbouring
property (e.g. KPC, KAA, KCAA,) etc.
 j. Notice of withdrawal of caveat or caution if there are any third parties having
an interest in the property;
k. Original Land Rent payment Receipts;
l. Original Land Rates payment Receipts;
m. KRA PIN of the vendor;
n. 3 coloured passport size photographs of the vendor or vendor’s directors
o. Copy of the Vendor’s ID

INTERIM PERIOD

The interim period as already stated between the execution of the contract and
completion is important for two reasons:

· The performance of the various contractual obligations in preparation for

completion
· The risk of the property
i) Performance of Obligations

The Contract will have various obligations imposed on the parties. We have
witnessed that one of them is the payment of deposit which the Purchaser must
effect. The Purchaser must also put together his finances, visit and inspect the
property. The Vendor on the other hand must obtain the requisite consents,
discharge and encumbrances (unless agreed it be discharged on completion). Any
other obligation under it must then be honoured.
ii) Risk of the Property

In a Court of Equity once there is a valid Contract of Sale, the Vendor becomes a
trustee for the Purchaser of the estate sold and the Vendor himself becomes owner
of the purchase money. This is so long as the Contract is not subject to a condition
precedent e.g. the obtaining of a planning permission.

As a Vendor qua trustee, the Vendor has a personal and substantial interest in the
property which he has to protect and actively so. His interest includes obtaining
the purchase money which he can only do if he also delivers the property “held in
trust”. He is thus under an obligation to ensure that the property’s condition does
not deteriorate nor is the same wasted. The Purchaser’s interest is however only in
the property and not any income being derived there from. As the Vendor is
entitled to a lieu on the property as security of the purchase price, the Vendor will
always retain possession. He must however honour his duty to maintain the same.
He must treat property as a prudent owner and not wilfully damage it. He has to
use reasonable care to maintain it but he is not obliged to improve it. The Purchaser
is entitled to lay claim in damages if he completes the contract even though the
property has been wasted. But if the property is completely wasted he is entitled
to rescind and claim his deposit. To avoid situations like the latter, the Vendor
always takes insurance. It is different if risk and possession is passed at date of
contract.
ACTUAL COMPLETION

The parties once ready to complete the Conveyance (the Vendor ready to execute
the Purchase Deed and deliver the other completion documents and the Purchaser
ready with the purchase money), completion can be effected. As a general rule
and as per Condition 8.2.2 of the LSK Conditions of Sale 2015, completion takes
place at the Vendor’s or the Vendor’s Advocates offices, but the parties can agree
otherwise.

Completion will take place on the date agreed at 2.00 p.m. (Law Society of Kenya
Conditions of sale 1989), the LSK Conditions of Sale 2015, do not fix the time.

The Vendor will deliver the keys (possession) and the completion documents
(stated earlier). The purchaser on the other hand will deliver evidence of payment
for the balance of the purchase price and apportioned outgoings as well as the
authority to release the deposit.
POST COMPLETION

Once the actual conclusion has been done, the advocates for both the vendor and
the Buyer:

- Report to and account to client.

- Stamp documents
- Register documents together
- Notify the world

D. REGISTRATION PROCESS
STAMPING

Documents presented for assessment of stamp duty at banking hall. Assessor of

Stamp Duty confirms whether duty is payable and then issues KRA stamp duty
assessment form to be completed Assessor assesses the amount of stamp duty
payable. Applicant pays at KCB or NBK.

Applicant brings back document and form together with proof of payment. Bank
makes reconciliation of payments received and gives collector of stamp duty
statements of payments (takes 2 days)

Documents are stamped and given to accountant to countercheck payments and

then to auditors to audit. Documents picked for registration
REGISTRATION
Registration is a process of recording interests in land so as to facilitate
ascertainment of these interests through searches for effective conveyancing.
Once carried out, registration has the effect of passing an interest in land from one
party to another. It is vital that the transfer of interests of these persons in or over
the land in question be protected upon the transfer of that land.
Old Regime

Previously there were several registries

• RTA-2 registries (Nairobi Central Registry and Mombasa Central

Registry)
• GLA, Nairobi Central Registry
• LTA, Mombasa Central Registry
• RLA, various District Registries
• RDA, Principle Registry in Nairobi, for all matters outside Coast &
Coast Registry for matters within the Coastal region.

New Regime

Registries to be constituted by the Commission- see S6 &7 LRA. A land Registry in

each registration unit.
Procedure

i) Present document plus completed application for registration form in

quadruplicate to booking counter. They are stamped with received
stamp
ii) Day book number is indicated on both the documents and forms for
follow up
iii) Auditor checks documents to ensure payment in terms of stamp duty
iv) Strong room officer retrieves relevant files and matches the
documents
v) Investigation officer checks whether they are properly drawn and that
there are no encumbrances, may make recommendation for
registration
vi) The documents are given to the registry superintendent who assigns
them to assistant registrars to make entries
vii) Assistant registrars enter the transaction on original title (RTA)
and indicate the time and date of registration which is the date of
booking documents. RLA new certificate of Lease/Title Deed is
prepared
viii) Documents are passed the Registrar who will sign if found to
be in order
ix) Documents sealed and photocopied ( no need for photocopying of
RLA as original title is retained)
Where There Is Subdivision or Amalgamation

The investigating officer refer the deed plans to the Department of Surveys for
confirmation and they in turn refer the documents to the valuation division for rent
apportionment and assessment.

Registration is a process of recording interests in land so as to facilitate

ascertainment of these interests through searches for effective conveyancing.
Once carried out, registration has the effect of passing an interest in land from one
party to another.

It is vital that the transfer of interests of these persons in or over the land in question
be protected upon the transfer of that land. NOTE: (registration is explained further
in the previous week.)
 WEEK 7

1. Leases and Licences

2. Mortgages and charges.

- Doctrine of Tacking

- Doctrine of Consolidation

3. Equity of Redemption

4. Remedies available to a Chargee

5. Transmissions.
LEASES AND LICENCES
A. DEFINITIONS & DISTINCTIONS

When an owner of a property who does not wish to stay or occupy the land himself
may grant another person the right to occupy and use the property for a certain
period in return for an agreed sum of money. This is done by creating a lease on a
property. Thus a lease, as generally understood today, is a document creating an
interest in land for a fixed period of certain duration, usually in consideration of the
payment of rent.

Section 2 of Land Act No.6 of 2012 defines a Lease as:

“The grant, with or without consideration, by the proprietor of land of the right to the
exclusive possession of his or her land, and includes the right so granted and the
instrument granting it, and also includes a sublease but does not include an
agreement for lease.”

In Prudential assurance Co. Ltd.v London Residuary Body, Lord Templeman

explained that a lease is ‘a contract for the exclusive possession and profit of land for
some determinate time.’

The Definition of a Lease is also contained in the repealed land laws. For instance,
under Section 3 of the RLA, a lease is defined as, ‘grant with or without
consideration by the proprietor of land, of the right to exclusive possession of his land
and includes the right so granted, and the instrument granting it, and also includes a
sub-lease but does not include an agreement for a lease’. Under the ITPA at Section
105, a lease of immovable property is ‘a transfer of a right to enjoy such property,
made for a certain period, express or implied, or in perpetuity, in consideration of a
price paid or promised, or of money, a share of crops, service or any other thing of
value, to be rendered periodically, or on specified occasions to the transferor by the
transferee, who accepts the transfer on such terms’.

A lease is, from the aforementioned statutory definitions, an interest that is created
when a proprietor of land lets out his land to another person such that the other
party obtains a right to exclusive possession. The lease is for a specified or
determinate period of time and is in respect of defined premises. It involves the
derivation of rights from a superior title and the enjoyment of such rights subject
to specific conditions and in exchange for payment of rent.

A lease is executory contract where rights and obligations remain outstanding

between the parties during the course of the lease. In other words, a lease creates,
for a term of years, a leasehold relationship between a landlord or lessor and a
tenant or lessee.
 The transferor is called the ‘lessor’, the transferee is called the ‘lessee’, the price
is called the ‘premium’ and the money, share, service or other thing to be so
rendered is called the ‘rent’.

The state regulates certain types of leases through the Rent Restriction Act
(Chapter 296) which deals with residential premises and the Landlord and
Tenant (Shops Hotels and Catering Establishments) Act. (Chapter 301) which
deals with commercial/office 2 premises. NOTE: These Acts were not repealed by
the new land regime.
The holder of a leasehold interest can transfer it to another person. This transfer is
referred to as an “assignment” .He can also charge the leasehold interest to a
lender in return for a loan or other financial accommodation. He can also create
another lease over the same piece of land. This is referred to as a sub-lease or
under-lease.

LEASE AND LICENCE: A DISTINCTION

A license is defined as a grant under which the grantee takes only the right to use
the premises without exclusive possession .It is a permission given by the
proprietor of land which allows another person to enter upon the land and do
something or perform an act on the land. Without this permission such entry by that
other person would be a trespass.

S2 of the Land Act, 2012 defines a license as, ‘permission given by the commission
(for public land) and proprietor (for private land) allowing the licensee to do some
act in relation to the land which would otherwise be a trespass but does not include
an easement or profit.’ S.20 of the Land Act, empowers the National Land
Commission to grant a person, at a prescribed fee, a licence to use un-alienated
public land for a period not exceeding five years subject to planning principles as
it may prescribe.
Under Common law, a license can either be; a contractual, simple or bare, or
coupled with interest
a) Simple/Bare License
It is given gratuitously and is not coupled with any grant of interest and is revocable
by the licensor at will. Can be revoked expressly or by conduct sufficient enough
to indicate revocation of the permission to be present on anyone’s land
b) A Contractual License
It is for value for example where one buys a ticket from another so as to view a
performance. Revocable at any time at common law. However in equity, it is
irrevocable for as long as the parties intended or until terminated by notice
prescribed for such.
c) A license coupled with interest
It is an irrevocable license that grants an interest in land or in personal property.
A license coupled with an interest may be binding on successors in the title of the
licensor.
A licence to use a signboard granted at the same time as, and in connection with,
the sale of a shop could be a licence coupled with an interest. It is irrevocable and
binding on third parties such as a purchaser from the licensor.

LEASE V LICENCE
Exclusive possession
 This is the key and vital feature of a lease. The lessee must acquire a right of
possession of the property to the exclusion of the lessor. If the lessor visits
the property without lawful authority (notice must be given) he can be sued
for trespass
 Possession alone does not result in a lease. If it is not exclusive then a license
is created. The exclusiveness of possession also depends on the degree of
control
 Desai V Cooper (1950)214 KLR 32- the defendants did not have keys to the
front door of a shop and could only access it from the back. They could not
enter the front when they pleased but had to go to their portion through the
plaintiff’s portion. The plaintiff sought to recover the portion occupied by the
defendants. The Court held that even though the defendants had exclusive
use of a portion of the premises, they did not have exclusive possession and
were licensees not tenants.
 A licence does not create any interests in a property to which it relates, but
merely conveys a privilege in the use of the property. (See Baker v Green
[1945] 3 W.W.R. 555)

B. CLASSIFICATION OF LEASES
Traditionally, leases were classified as follows:
1) A lease for a fixed period
This arises in a situation where the Landlord and Tenant state in the agreement the
specific period for which the lease will be in existence.
2) Periodic tenancies
Ss. 106 and 116 ITPA, Ss. 3, 46 and 52 RLA- This is a lease that arises and runs
indefinitely from one period to another. It can run from month to month or year to
year, but it cannot be for a period of more than one year (S28 (f) of LRA). It can be
terminated by notice.
3) Tenancy at Will
This arises where the tenant occupies the land with the permission of the landlord
on terms that the relationship may be terminated by either party at any time. It is a
tenancy at will of the lessor
4) Tenancy at Sufferance
This is a tenancy by which a tenant comes into possession first by lawful lease but
continues in possession wrongfully after his lease has expired. It is also referred to
as a “tenancy by holding over”. Under the Rents Act such a tenant may become a
protected tenant .Also, under Sections 52 RLA and 116 ITPA such a tenant becomes
a periodic tenant if the lessor consents to his remaining in occupation.
5) Lease in Possession
Term commences from a past date of date of execution. Here, the term of lease is
deemed to have commenced from a past date of execution.
6) Reversionary lease
This is a lease created for a period that is to commence on a future date. It is also
referred to a Future lease. Under s.51 RLA, such a lease must

C. ESSENTIALS OF A LEASE
Deriving from the definitions of a lease, three (3) essentials of a lease arise, with
which creates a valid lease. These essentials are namely: Defined areas and
parties; certainty and duration and; exclusive possession. These essentials will be
discussed below.

1. Defined areas and property

The land or part thereof must be defined. The rule is that no lease can be created
where the frontiers of the property cannot be identified. The Court in Ratwani V
Deganela (1956)17 EACA 37 stated that for a lease to exist, the land must be
defined. In this case the lessee was to share a shop and his portion was not defined.
In Heptulla Brothers Ltd. v. Jambha Jeshangbhai Thakore, the court explicitly stated
that no tenancy could be created where the premises intended to be let out could
not be ascertained with sufficient precision.

S56 of the Land Act gives power to lease whole or part of the land. If part of land
is being leased it shall be accompanied by a plan or other description which the
registrar deems adequate to identify the property.

Parties must also be identified

2. Certainty and Duration

The term of a lease must have a beginning and a certain ending. It must be definite;
that is for a specific period or for a period capable of being ascertained. Where the
date of commencement or the date of expiry of the lease is uncertain, the
transaction is void.

S 56 of Land Act states that, ‘the owner of land may lease the land or part of it to any
person for a definite term or for the life of the lessor or the lessee or for a period which
though indefinite may be determined by the lessor or lessee.’
 3. Exclusive Possession
A tenant must acquire the right of possession to the exclusion of the landlord and
all persons claiming through the landlord. In the leading case of Street v. Mountford,
it was stated that in determining whether a tenancy has been granted, the essential
question is whether there has been the grant of a right to the exclusive possession
of the premises. If there is exclusive possession, then, provided the other
requirements for a tenancy are satisfied, a tenancy will have been created.

D. IMPLIED CONDITIONS & EXPRESS COVENANTS

Some matters in a lease agreement may be silent, however without them the
agreement would be void. The law implies certain covenants into the lease
agreement because they are very essential to the agreement.

LESSOR’S COVENANTS
1. Quiet Enjoyment
This covenant was to the effect that the lessor guarantees that the lessee would have
quiet enjoyment of the property so long as the lessee paid rent and performed the
covenant to be performed on its part
The lessee has the right to exclusive possession. The lessor has no right to
intimidate the lessee from exercising his right to exclusive possession.
2. Non-derogation from grant
Not to use or permit any adjoining or neighbouring land that the lessor owns or
leases that would in any way render the leased land or any buildings on the leased
land unfit or materially less fit for any purpose for which they may be used. It goes
hand in hand with quiet enjoyment.
The lessor must not frustrate the use of the land for the purpose for which it was let.
3. Duty to Repair
If part of the building is leased, keep the roof, all external and main walls and
drains and common parts, installations and facilities, including passages and
walkways in a proper state of repair. Here, the lessor is responsible for external
repairs.
4. Fitness for Habitation
If flat, house/room that it is fit for human habitation at the commencement and
throughout the lease period.
5. Suspension of Rent
If the premises are destroyed by an Act of God, rent shall be suspended until
premises are made fit for habitation within 6 months and lessee shall have the
option to terminate.
6. Fitness for Purpose
If the land can only be used can only be used for one purpose, that lease can be
terminated if the property can no longer be used for that purpose.
7. Pay all Rates, Taxes, Dues and Outgoings
8. Possession
The lessor has to put the tenant into possession of the property. (s 108 of the ITPA)

LESSE’S COVENANTS
1. Covenant to pay rent
The lessee is under an obligation to pay rent at times and in the manner specified
because a lease creates an interest in land. The only exception is where the
property is destroyed or damaged by any Act of God, since they cannot be
attributed to the lessee’s negligence.
2. Duty to pay rates, taxes and other outgoings
This is in respect of the leased premises during the continuance of the lease unless
the same are payable exclusively by the landlord.
3. Covenant to repair
When a state o
4. Covenant to keep furniture in good condition and to replace lost articles of
property.
5. Use land in a suitable manner and in accordance with the conditions in the
lease including not to cut down any tree unless that is necessary to enable the
use of the land.

E. ASSIGNMENTS AND DETERMINATION

An assignment occurs where a holder of a leasehold interest transfers it to another
person. It is the transfer of the whole of the interest of a lessor or lessee under a
lease to a third party. Assignment takes place when a third party takes the identical
term which the lessor or lessee holds in respect of a leasehold interest.

The person who makes the assignment is called the ‘assignor’. The person to whom
an assignment is made is called ‘the assignee.

The whole interest must be transferred in that the lessor must assign the whole of
his interest including the reversion. The lessee must assign the whole of his term.
If for instance the assignor reserves a part of the term for himself, then there would
be no assignment.

For one to be considered an assignee, he/she must be: a third party to whom the
lessor passes the reversion or a third party to whom the lessee passes the term of
years.

F. SUBLEASES
The main lease is known as head lease and a sublease does not operate as an
assignment. A sublease cannot subsist beyond the head lease, in instances where
it is extended or renewed, it shall expire at the end of the head lease.
Under Section 67, the tenant may have to seek consent of the lessor to sublet if there
is a covenant requiring him to seek consent before subleasing. The lessor shall not
withhold such consent unreasonably and must give the lessee a written response
to his request within a reasonable time.
G. THE REGIME OF RENT ACTS
The purpose of these Acts is to protect tenants from being exploited by Landlords
and also against eviction. The tenancies to which these Acts apply cannot be
terminated under the normal rules relating to leases. The two (2) Acts are:
1. Rent Restriction Act (CAP 296)-Residential premises
2. Landlord and Tenants (Shops Hotels and Catering Establishments) Act
(Cap 301)-Business Premises.

1. Rent Restriction Act (CAP 296)

The RRA protects tenants of dwelling houses or residential premises. The effect of
this protection is that a tenant cannot be evicted without an order of the Rent
Tribunal.
S. 3(1) of the Rent Restriction Act provides for the exceptions of the application
of the Act to include:-
a) Excepted dwelling houses (excepted by Minister)
b) Dwelling houses which are let on service tenancies
c) Dwelling houses having a standard rent exceeding Ksh. 2500/= per month
whether furnished or unfurnished.
2. Landlord and Tenants (Shops Hotels and Catering Establishments) Act (Cap 301)
This Act protects tenants of business, office or commercial premises. The protected
tenants are referred to as controlled tenants .They cannot be evicted without the
order of the Business Premises Tribunal.

S.2 thereof provides that a controlled tenancy means a tenancy of a shop, hotel or
catering establishment:
a. Which has not been reduced to writing; or
b. Which is- in writing and which:
i) Is for a period not exceeding 5 years; or
ii) Contains a provision for termination otherwise than for a breach of covenant
within 5 years from the commencement thereof: or
iii) Relates to premises which the Government may specify as controlled.

E. TERMINATION OF LEASES
There are several possible ways in which a lease or tenancy may come to an end
in Kenyan law. These ways include the following:

1. Expiry or effluxion of time: A lease or tenancy for a fixed term automatically

terminates on the expiry of the stipulated period without any requirement that the
tenant should be given any form of notice to quit. Similarly, when an event upon
which the lease is expressed to come to an end has occurred then the lease
terminates automatically.
2. Notice: Essentially, a notice to vacate the premises is required where the lease
is for a fixed term, if such was prescribed in the lease agreement. Pursuant to
section 64(1) (d) RLA, a lease is determined where a notice duly given to determine
the lease has expired.
3. Surrender: A lease or tenancy may be determined by a surrender of the tenant’s
interest to his immediate landlord. If the landlord accepts surrender, the tenant’s
term of years merges forthwith in the landlord’s reversion and is extinguished. A
surrender of the tenant’s term may be made either expressly or impliedly by
operation of the law.
4. Forfeiture: S 73 of the Land Act allows the lessor to re-enter the premises making
the lease voidable at the lessor’s option if the lessee:
a) Commits any breach or omits to perform any agreement or condition expressed
or implied in the lease
b) Is adjudicated bankrupt
c) Goes into liquidation
It is exercised in two ways
- If lessee is not in occupation by entering and remaining in possession of
the land
- By court action
5. Merger
6. Frustration: the contractual doctrine of frustration may sometimes apply to the
existence of the lease as a whole. Under section 108(e) ITPA, a lease is frustrated if
any material part of the property is wholly destroyed or rendered substantially and
permanently unfair for the purposes for which it was let. In such a circumstance the
lease is voidable at the option of the lessee. Under the RLA where such destruction
has occurred, the rent payable is wholly or partially suspended until the property
has been rendered fit for occupation and use.

F. EXTENSION AND RENEWAL OF LEASES

The Cabinet Secretary for the Ministry of Lands and Physical Planning in
consultation with the National Land Commission have published the Guidelines for
Extension and Renewal of Leases to guide persons dealing with matters relating to
the extension and renewal of leases.
Extension of Leases
1. Issuance of Notice
a. By virtue of Section 13 of the Land Act No. 6 of 2012, the Commission (NLC) shall
issue notices to lessees on the expiry date of their lease and inform them of their
pre-emptive right to apply for an extension of lease and whom to apply to.
b. The notices shall be issued through registered mail five (5) years before the
expiry of the lease.
c. If within one (1) year after the notice is issued there is no response, the
commission shall publish the notice in 2 newspapers that have countrywide
circulation.
d. If there is still no response, the commission may undertake physical verification
of the land to establish its status. If the lessee is in occupation, the commission shall
advise on the lessee’s pre-emptive right to apply for an extension and the
consequences of not applying for the same.
2. The process of Application
a. An application in the form of a letter is made by the registered owner who shall
attach the following documents to the letter:
i. A copy of ID/Passport;
ii. Letters of administration or confirmation of grant (if applicable);
iii. Current official search over the property (not more than 1 month old);
iv. Certificate of Incorporation and CR12 if owner is a company; and
v. Clearance certificates from the relevant authorities.
b. The National or County Government will consider the following factors:
i. Whether there is large scale investment on the land; and
ii. If the investment is beneficial to the economy and in accordance with the national
development goals (National Spatial Plan).
c. The National or County Government shall seek representation from the following
people in deciding whether to approve or reject the application:
i. The County Executive Member responsible for land;
ii. The County Government Surveyor;
iii. The County Government Physical Planner;
iv. A land administration officer of the commission; and
v. Other relevant officer.
3. Approval
a. If the application is approved, the National or County Government shall extend
the lease for a specified time and forward their decision to the Commission for
implementation whereby the Commission shall:
i. Re-value the land to determine the rent payable;
ii. Re-survey and geo-reference the land;
b. The lessee shall then surrender the existing lease and shall be issued with a new
certificate.
4. Rejection
a. The commission shall give reasons and notify the lessee of their decision. The
reasons for the rejection could be:
i. The lessee has not complied with the terms and conditions of the existing lease;
or
ii. The land has been included in the National Spatial Plan and Cities and Urban
Areas Plan.
b. The lessee shall not put up any other development on the property once notice
is issued on the rejection.
c. The National/County Government shall then carry out an inventory of the
development on the land and the lessee shall be required to approach the
respective government for compensation of the development on the land.
5. Appeal
a. A lessee who is aggrieved by the decision can appeal to a committee that shall
be established by the committee.
ENFORCEMENT OF OBLIGATIONS UNDER THE LEASE
1. The lessor may distress for rent under the Distress for rent Act.
Distress is the right to remove certain goods or chattels from the possession of the
lessee in order to compel him to pay the rent due. Seized goods are sold after 10
days of seizure if the lessee fails to pay the outstanding rent.
2. The lessor has the right to forfeit the lease under S73-76 of the Act.
This right may be exercised if the lessee commits any breach of or omits to perform
any agreement implied or expressed in the lease, or if the lessee is adjudicated
bankrupt or goes into liquidation.
Forfeiture is exercised by entering upon and remaining on the land/premises by
the lessor or by any action in the court. It determines or terminates any sublease
that may have been existing in the land or premises. The lessor is required to give
notice before exercising this right.
3. Action for recovery of rent.
The lessor can sue the tenant to recover rent especially where the landlord has
distressed and amount realised is not adequate to cover the rent due or
outstanding.
4. Action for damages
Where there is breach of a covenant other than that of payment of rent, the lessor
can sue to recover damages from the lessee.
5. Injunction: for instance to injunct an illegal eviction.
RENEWAL OF LEASES
An application for renewal occurs where prior notice of expiration by the
Commission has not been given as required under Section 13 of the Land Act No.
3 of 2012.
1. Application process
a. The application is done by the registered owner or administrator and the same
is addressed to the Chairman of the NLC. The application can be made by
physically delivering the documents at Ardhi House or online by forwarding the
application and supporting documentation to info@landcommission.go.ke
b. The application should be accompanied with:
i. A copy of ID/Passport;
ii. Letters of administration or confirmation of grant (if applicable);
iii. Current official search over the property (not more than 1 month old);
iv. Certificate of Incorporation and CR12 if owner is a company;
v. Clearance certificates from the relevant authorities; and
vi. Proof of compliance of the terms and conditions of the lease.
c. If the owner is a large scale investor, the National and County Government shall
consider if renewal is beneficial to the economy and is in accordance with the
National Spatial Plan.
d. The Commission shall seek representation from the following prior to approving
the renewal:
i. The County Executive Member responsible for land;
ii. The County Government Surveyor;
iii. The County Government Physical Planner;
iv. A land administration officer of the commission; and
v. Other relevant officer.
2. Approval
a. If the recommendations are favourable, the Commission shall approve the
renewal and:
i. Re-value the land to determine the rent payable;
ii. Have the land re-surveyed and geo-referenced; and
iii. Issue a new letter of allotment in the prescribed form and a new lease shall be
issued.
3. Objection
a. If the application is objected by the recommending authorities, the commission
shall require the said authorities to issue their reasons within thirty (30) days.
b. If the land is needed for public purpose and is included in the National or County
Plans, the same shall be an adequate reason and no appeal may be accepted.
4. Appeals
a. An aggrieved party may appeal to an independent appeal committee
established by the committee.
CHARGES AND MORTGAGES

1. DEFINITIONS
Both Mortgages and charges are borrowing transactions which are designed to
provide creditors with a valuable form of security for loan money advanced by
them.
A charge is defined under s2 of the Land Act & s3 of the repealed Registered Land
Act as, ‘an interest in land securing the payment of money or money’s worth or the
fulfilment of any condition and includes a sub-charge and the instrument creating a
charge.’ in simpler terms a charge is a security for loan with an undertaking for
repayment; it confers certain rights to the Chargee from the Chargor in respect of
possession and sale. There is no transfer of any interest in a charge since it
operates only as a mere appropriation of the property as a security of a debt.
Mortgages, is defined by Lindley LJ in the case of Santley v Wilde as, ‘a disposition
of some interest in land or other property as a security for the payment of a debt or
the discharge of some other obligation for which it is given.’ Similarly under the
ITPA, mortgage is defined as, ‘the transfer of an interest in specific immovable
property for the purpose of securing the payment of money advanced by way of loan,
an existing or future debt or the performance of an engagement which may give rise
to a pecuniary liability.’ Simply put, mortgage is a conveyance of land as a security
for the payment of a debt or the discharge of some other obligation. Mortgage
deals with the transfer of interests as security for any loan advanced.
The transferor of the interest is referred to as the ‘mortgagor’ while the transferee
is referred to as the ‘mortgagee’. The sum of money over which interest is
advanced is known as the ‘mortgage sum.’

CLASSIFICATION & CREATION OF MORTGAGES

Mortgages are classified into Legal mortgages and Equitable mortgages. The legal
mortgages are further classified into simple mortgages, mortgages by conditional
sale, usfructuary mortgages and English mortgages.
a) Legal Mortgages

Under a legal mortgages there is transfer of a legal interest in land whether

leasehold or freehold from the mortgagor to mortgagee and must be created by a
deed or statutory form. It is required that the mortgage be effected by a registered
instrument signed by the mortgagor and attested by at least two witnesses. Four
types of legal mortgages were created under the repealed ITPA which are
recognizable under Kenyan law namely: simple mortgage, mortgage by
conditional sale, usufructuary mortgage and English mortgage which will be
discussed below.
 1) Simple Mortgages

Under this type of mortgage, there is no delivery of possession but the mortgagor
binds himself to personally pay or the property will be sold.

2) Mortgage by Conditional Sale

The mortgagor of a mortgage by conditional sale sells the property to the

mortgagee on the condition that the sale will become absolute upon default, or on
the condition that on such payment being made the sale shall become void, or on
the condition that on such payment being made, the mortgagee shall transfer the
property to the mortgagor.

3) Usufructuary Mortgage

Under this type of mortgage, possession is delivered with the authority to retain it
until payment of the debt fully and the mortgagor also obtains rights to secure rents
and profits towards the repayment of the mortgagee’s debt.

4) English Mortgage

The mortgagor transfers property to the mortgagee with a proviso that upon
payment of the mortgage money the latter returns it. The English mortgage is
regarded as the best security amongst all the mortgages. This is because under the
English mortgage, the mortgagee has all the basic remedies.

b) Equitable Mortgages

Equitable mortgages are created by the tenets of the principles of equity rather
than statute. This fact remains even if equitable mortgages can be created by
statute since the principles and doctrines of equity are prevalent. This is the case
with equitable mortgages of Kenya, created by the Equitable Mortgages Act, Cap
291. This Act defines vividly what an equitable mortgage is. Section 2 of the
Equitable Mortgages Act, Cap 291 provides for the recognition of an equitable
mortgage to mean delivery of a person or his agent of a document(s) of title to
immovable property, with intention of creating a security.

The proof of intention of creating a security is through signing of a memorandum.

The equity maxim from which this type of mortgage emanates is, ‘equity considers
done that which ought to be done.’

The creation of equitable mortgages can be done in five (5) ways. They include:

1. By deposit of title.
2. Where money has been advanced and the mortgagee agrees to execute a
legal mortgage.
3. If the estate or interest is equitable.
 4. Written memorandum identifying the property and indicates intention to
charge property.
5. By delivery of title (Equitable Mortgages Act.

Note: Read Barclays Bank DCO v Gulu Millers (1959) EA 540; Samuel Kenneth
Ondendaal & the Official Receiver v Richard Gray (1960) EA 263.

LEGAL V EQUITABLE MORTGAGES

In legal mortgages, there is a transfer of a legal interest in land whether leasehold

or freehold from the mortgagor to mortgagee and must be created by a deed or
statutory form. While in equitable mortgages, there is a transfer of an equitable
interest in land or other properties since it is an agreement to enter into a mortgage
agreement, created on the rules of equity. A mere deposit of a title deed in
exchange for a loan without a written agreement is an equitable mortgage.

Legal mortgages have the following advantages over equitable mortgages

o They are easier to enforce.

o Priority- a legal mortgage without prior notice of an equitable mortgage
takes priority over the equitable mortgage.
o They are less prone to fraud than equitable mortgages where a borrower
can obtain a provisional title and property.

The advantages of equitable mortgages over legal mortgages include

 Small amounts
 Short repayment periods
 Urgency

TYPES OF CHARGES UNDER THE NEW LAND LAW REGIME

There are two (2) types of charges which are recognized under Section 79 of the
Land Act, 2012. These are:
a) Formal charge: S79 (1) Land Act whereby an owner of land, by instrument
in the prescribed form may charge the interest in the land or part thereof for
any purpose including but not limited to securing the payment of an existing
or a future or contingent debt or fulfilment of an obligation.

For a formal charge to be valid, is has to be registered in a prescribed

register and unless it is registered, the charge cannot be entitled to the
remedies under the charge.
b) Informal charge: S79 (6) Land Act: Under an informal charge there has to
be a written or witnessed undertaking from Chargor accepted by Chargee,
with intention to charge.
 The Chargee then undertakes to: Deposit of certificate of title or lease
document or any evidence of ownership or any undertaking observed by
custom.
A charge must first obtain an order of the court is he intending to take
possession of or sell the land which is subject to a formal charge. (s79(7)
Land Act)

FURTHER V SECOND CHARGE: (s57 Land Registration Act, 2012)

i) Further Charge- This refers to an additional facility by the same lender to

the same borrower on the security of the same property
ii) Second Charge–This refers to a separate charge over the same property to
a different lender.
S2 Land Act defines a charge to include a sub charge
“A chargee may charge the rights it has under the charge therefore create a
charge out of a charge in order to raise money as an alternative to assigning
the debt. The subchargee has the double security of the original Chargor and
the original chargee.”

BASIC REQUIREMENTS OF A CHARGE

- Section 46 of the Registration of Titles Act states that for one to execute a
charge, the charge must be executed in Form J (1) or J (2) in the First Schedule.
The Forms must include the following requirements:

a) There must be a Chargor

b) Name and description of lender

c) Description of property

d) Amount advanced

e) Acknowledgement of receipt of loan

f) Covenant to repay principal & interest

g) Special conditions (if any)

h) A charging clause
- Section 80(3) Land Act provides that every Charge Instrument to contain:-

a) The terms and conditions of sale

b) An explanation of the consequences of default

c) The reliefs that the chargee is entitled to including the right of sale.
DUTIES OF ADVOCATES
Process of securitization starts with application by borrower for a loan. Lender
will ensure that due diligence is carried out- i.e. credit assessment of borrower and
evaluation of property (this is an internal process, if approached advise the bank
to seek help of other professionals such as valuers etc.).

DUTIES OF CHARGEE’S ADVOCATES

1. The bank will then involve its advocates once it has prepared and secured the
execution of the offer letter by both parties

2. The following details are contained in the offer letter

a) Details of the parties- full names and addresses (borrower, lender, guarantor)

b) Amount to be lent/borrowed and amount to be secured by the property

c) Repayment period and repayment mode (monthly, quarterly)

d) Particulars of property to be charged (title no or land reference no.)

e) Details of intended security (informal or formal charge)

3. Advise the bank on

• The appropriate security whether Informal (equitable) vs. Formal (legal) charge

4. Proper investigation of title

5. Confirm the capacity of Chargor

a) Company- confirm if memorandum and articles allow for borrowing and

charging

b) If Trustees-confirm if trust deed allows for borrowing and charging

6. Draft charge and send to borrower‘s advocates for approval (mostly take it or
leave it)

7. Confirm execution and attestation- Is Advocate qualified? (Ndolo Ayah Case)

8. Engross the charge and send it for execution and attestation

9. Ensure execution and attestation is done in accordance with the law

10. Dispatch document to the lender for execution and attestation

11. Pay stamp duty (obtain from the borrower)

12. Lodge for registration at lands registry and companies registry (if it is a
company within 42 of registration of charge S 96, 97, 99 of Companies Act, void
against liquidator), Cooperative Societies- See Cooperative Societies Act)

13. Forward the perfected documents to your client with a report on the title
confirming the registration

14. Obtain loan proceeds from chargee for onward transmission to the Chargor

15. Follow up on fee payment

DUTIES OF BORROWER’S ADVOCATE

i) Discuss offer letter with borrower and advice on effect of security

ii) Obtain all requisite consents, clearances from seller (usually upon a
professional undertaking for payment upon registration)
iii) Obtain original title from seller (usually upon a professional undertaking for
payment upon registration)
iv) Obtain a professional undertaking from the lender‘s advocates that they will
not use the title document for any other purpose than for the transaction
v) Approve the charge
vi) Explain the contents of the charge to your client and its effect
vii) Obtain adequate funds for stamp duty
viii) The advocate should assess whether there are any conflicts of
interests
• Ethical and professional responsibility issues may arise. Remember the
general principle that unless you cannot avoid it, you should refrain from
acting for both parties. {See: King Woolen Mills Ltd &Anor vs. M/S Kaplan &
Stratton [1993] LLR 2170 (CAK), (C.A 55/93).Uhuru Highway Development Ltd
& others vs Central Bank of Kenya Ltd & others (2), [2002] 2 EA 654.}
• In Mortgage Express Limited V Bowerman& Par Partners (1996) 2 ALL ER 836,
It was held that when you act for both borrower and lender, the highest duty
is to the lender. Where 3rd parties are involved e.g. Spouse ensure that they
have obtained independent legal advice.

SUBSEQUENT CHARGES/ PRIORITIES

The process is the same with subsequent charges. The rules on priorities organize
interests in ranking, so that each party can ascertain which interests are prior and
which are subordinated to his or hers. The general rule is that the charge which is
first made is first paid or discharged. Priority is conferred by registration. The first
registered charge has priority over all the others. (See S81 Land Act).
THE DOCTRINE OF TACKING (CHARGEE’S RIGHT TO TACK)
The right of a secured lender to add further monies to the security so that further
monies are also secured. The further advances are also tacked into the original
charge and have the same priority over subsequent lenders only with their
consent.
Section 82 of the Land Act No.6 of 2012-This must be provided for expressly in
the charge instrument and must also be recorded in the Register.

However, even where the Chargee exercises its right to tack and advances further
loans, such further advance must be done in a written memorandum signed by the
Chargor (See Section 84(2) of the Land Act as interpreted in the decision in Stephen
K Melly & 2 Others v Ecobank Kenya Limited &Another [2016] eKLR). There are two
types of tacking.
i) Tabula in Naufragio (Plank in a Shipwreck)

Where there are three mortgages affecting a single property, the third lender is
allowed to get priority over the second lender by paying off the first mortgage and
tacking his mortgage into the first mortgage.
ii) Tacking of further Advances

Where a lender makes a further loan to a borrower, he is allowed to tack together

both loans and to recover them prior to any intervening lender, provided he has
not received any notice of the intervening mortgage at the time of the further
advance.

THE DOCTRINE OF CONSOLIDATION

This doctrine arises where several properties, whether of one or several owners,
are mortgaged to secure one debt. Under the doctrine of consolidation, such
properties are, in the absence of a contract to the contrary, liable to contribute
rateably to the debts secured by the mortgage, after deducting from the value of
each property the amount of any other encumbrance to which it is subject at the
date of the mortgage.
Section 83 of the Land Act No.6 of 2012 states that where a chargor has more than
one charge with the chargee, the chargor and the chargee may agree to
consolidate/combine some securities into one or more charges and discharge
other charges. This must be provided for expressly in the charge instrument and
must also be recorder in the Register.

IMPLIED TERMS S 88LA

a) To pay principle money on day appointed in charge and interest at rates agreed
upon

b) Pay all rates, charges, rent, taxes and other outgoings

c) Repair and keep in repair all buildings and other improvements

d) Insure

e) Use land in a sustainable manner

f) Not to lease or sublease for more than a year without consent of chargee

g) Not to transfer, assign or lease without written consent of chargee

h) If a lease; to pay rent perform and observe covenants in the lease

i) If a second or subsequent charge, to pay interest on each prior charge when they
fall due

j) In 2, 3, 4, 5 and 8 chargee

FORM AND CONTENT OF A FORMAL CHARGE

A formal charge has to contain the following:

• Commencement date
• The Parties
• Principal amount
• Recitals- the following facts are recited
- The borrower‘s title
- Agreement to lend/borrow
- Agreement to create a legal charge

CONTENT

For a charge to be formal it ought to contain the following:

• Testatum (now this Charge witnesses)

• Covenant to pay
• Interest
• Secured obligations- aggregate principal amount, all interest from time
due, all costs, taxes, liabilities, charges and expenses incurred by the
bank from time to time in relation to the charge
• Charging clause.... Charge the premises as continuing security for the
payment and discharge in full of the secured obligations
• Chargors covenants
• Events of default
ATTESTATION AND EXECUTION

As stipulated under S 38 LA a Contract for the disposition of an interest in land must

be: In writing; signed by all parties thereto and attested by a witness who was
present when it was signed
This section should be read together with S 44(1) LRA which provides that every
instrument affecting the disposition of land must be executed by each of the parties
consenting to it. Section 44 (2) LRA- execution should consist of the person
executing the instrument appending his or her signature or affixing his or her
thumbprint or other mark as evidence of personal acceptance. S44(3)Execution of
the instrument by a Corporate body, association, cooperative society or any other
organization should be effected in the presence of an advocate, a magistrate, judge
or a notary public. S45(1)LRA a person executing the instrument is required to
appear before the registrar, public officer or any other person prescribed and be
accompanied by a credible witness for purposes of establishing identity unless his
identity is known to the Registrar or prescribed officer. The Registrar or public
officer must identify the person executing the instrument and ascertain whether the
person freely and voluntarily executed the instrument and shall complete a
certificate to that effect. (S45 (2) LRA). This execution process must be followed
whenever executing all instruments under the meaning of disposition (which
includes an agreement to undertake these dispositions). Does this then mean
facility letters for credit facilities, letters of offer? S56 (1) LRA requires that for
charges the Chargor must acknowledge that he understands the effect of s 90 of
the LA which among other things provides for the remedies of the chargee.
RELIEF

S 103 to 106 LA- Chargor, spouse, guarantor, lessee, trustee in bankruptcy may
apply to court for relief against the exercise by chargee of any of these remedies
(error refers to remedies under s 85(3) (a) and (b)). Scope of those who can sue
has been widened. The Court has wide ranging powers including widening the
scope of orders by the court e.g. to extend time for Chargor to rectify default- s
102 LA. Court has power to reopen charges secured on a matrimonial home S105
(1) and 106(2) LA.

DISCHARGE
A discharge includes a re-conveyance, a re-assignment of charge. The mode of
discharge to be adopted depends on how it was created.

i) If the mortgage was created by way of assignment or a conveyance the

discharge will be in form of a re-conveyance or a reassignment
ii) If charge then a discharge of charge is prepared as per the prescribed form
Before sale or withdrawal from sale, the Chargor may pay the amount due and the
chargee may discharge the charge and deliver to the Chargor a discharge of
charge and instruments of title. The Chargor‘s advocate prepares a discharge.
DISCHARGE OF CHARGE

The right to discharge comes in 2 forms:

i) S 85(1), S 102 LA gives right to discharge- upon payment of all money

secured by the charge and performance of all obligations under the
charge before the land has been sold by chargee or receiver appointed.
This right is in mandatory terms
ii) S 85(3) a charge instrument may provide that a Chargor who wishes to
exercise their right of discharge before the expiry of the term of the
charge shall give one month‘s notice, shall pay not more than one
month‘s interest at the rate at which interest is payable as well as all other
monies secured by the charge

It simply means the Chargor has repaid the loan plus interest and penalties and the
chargee has released the title to the property used as security back to the Chargor.
Like the right of redemption it should not be fettered or clogged- See S 85(2).
EQUITY OF REDEMPTION IN MORTGAGES AND CHARGES

Equity has intervened on grounds of conscience in the relationship of mortgagor

and mortgagee, with the object of preventing any exploitation of the former by the
latter. The balance of legal protection in the mortgage transaction has therefore
tended in favour of the mortgagor rather than the mortgagee.

At common law, if a borrower did not repay the mortgage debt on the contractual
date of redemption (legal date of redemption) his right to redeem the property was
extinguished. But equity “looking at the borrower with unusual tenderness” and
guided by the principle that “once a mortgage always a mortgage” allowed a
borrower to redeem his property long after the legal right to redeem had expired.

The equity of redemption simply reflects the view of equity that irrespective of the
strict legal and contractual position, the real owner of the mortgaged land is still
the mortgagor albeit subject to the mortgage granted to hid creditor. Equitable
doctrine that there should be no fetter or clog on the chargor’s equity of
redemption- any provision which purports to limit, postpone or exclude the
chargor’s equity of redemption is prohibited.
ESSENTIAL ELEMENTS OF EQUITY OF REDEMPTION

The right to redeem is absolute, it cannot be clogged, and it cannot be fettered.

This means that any agreement or provision which purports to deprive the chargor
of the right of redemption shall be void. Lord Parker in Krelinger v New Patagonia
Meat and Cold Storage Co. Ltd (1914) AC 25 at 48 stated, “The rule may be stated
thus: the equity which arises on the failure to exercise the contractual right cannot be
fettered or clogged by any stipulation contained in the mortgage or entered into as
part of the mortgage transaction”. Similarly in Saleh v Eljofri the court categorically
held that a borrower’s equity of redemption was an essential element of every
mortgage and failure to repay the mortgage debt on the contractual date of
redemption did not debar the borrower from his right to redeem the mortgaged
property. In the case of Industrial & Commercial Development Corporation v
Kariuki & Gacheca Resources Ltd the court stated that the right of redemption
subsists until the transfer is registered.

Therefore, a mortgage that contained a clause that conferred on the mortgagee an

option to buy the mortgaged property was held to be against the doctrine of equity
of redemption. Similarly, a clause which allowed the mortgagor only a limited time
period within which to redeem the mortgage was void as a fetter on the
mortgagor’s right. In Lewis v Frank Love Ltd the mortgagor and the personal
representatives of the mortgagee agreed that if the representative did not demand
a repayment of the debt for a period of two years, the borrower would grant them
an option to purchase the reversion of a part of the mortgaged property. The court
explicitly held that the option was void since it was a clog on the equity of
redemption.

CHARGEE’S REMEDIES
Under Section 90(3) of the Land Act, if the Chargor does not comply within two
months after service of notice, the chargee may:

i) Sue the Chargor for money due and owing under the charge
ii) Appoint a receiver of the income of the charged land
iii) Lease the charged land, or if the charge is of a lease sublease the land
iv) Enter into possession of the charged land
v) Sell the charged land

Reference to 2 months in s 90 (3) is onerous since s 90(2) provides that the Chargor
should be given at least 3 months within which to rectify the default. S90 (4); if land
is community land (Charge is only valid if done with concurrence of family),
Chargee can appoint a receiver of income of charged land or apply to court for
order to lease, sublease or sell the land. S90 (5) form of Statutory Notice to be
prescribed by the Cabinet Secretary in consultation with the commission.
1. ACTION FOR MONEY

Under S91 LA- Chargee can sue for money secured if: Chargor is personally
bound to repay The security is rendered insufficient (not by chargee or charger’s
fault) and chargee has given Chargor opportunity to provide additional security
the chargee is deprived of the whole or part of the security through a wrongful act
or default of the Chargor. This remedy should only be pursued if the chargee has
pursued other remedies relating to charged land unless the chargee agrees to
discharge the charge
2. APPOINTMENT OF RECEIVER

Land Act vests the chargee the power to appoint receiver over income of charged
property implied in charge instrument. After notice under section 90 (1) the
chargee has to wait a further 30 days before appointing one.
Appointment/replacement is in writing by chargee. Receiver is deemed to be
chargor‘s agent- he is given powers in the name of Chargor to take possession of
property and deal with it by selling, leasing or charging. Chargor is responsible
for liabilities arising from acts of receiver. Advantages- bank does not have the
administrative burden of realization of security, the receiver‘s costs are recouped
from the assets of the Chargor-not more that 5% of money received S92 (7) LA. See
priority of payment of money received by receiver- S90 (8) LA
3. LEASING
Section 93- follows the appointment of receiver. Lease can only be granted after
30 days upon expiry of notice. To take effect in possession not later than 6 months
after its date. The chargee reserves the best rent I the lease. The lease should not
more than 15 years or length on term of charge whichever is shorter. The lease
should contain reasonable terms and conditions having the interests of the Chargor
and also contain a declaration of appointment of receiver by chargee
4. POSSESSION

Under Section 94, upon expiry of notice, the chargee can serve notice to enter and
take possession at least one month after service of notice. Entry must be peaceful.
Entry is achieved by taking the management of the property. Banks usually avoid
this due to the administrative inconveniences involved and because they will be
held liable for damage to property and account for profits and rents.
5. CHARGEE’S POWER OF SALE

Under Section 96(1) of Land Act where the Chargor is in default of obligations
under a charge and remains in default upon the expiry of the demand under s 90(1)
the chargee may exercise its power to sell. S 96 (2) before exercising the power to
sell the chargee must serve a notice to sell of at least 40 days.

In summary the following notices must be served;

a) 3 months demand S 56(2) only if date of repayment is not provided or

demand is not made on the repayment date.
b) If default continues for at least 1 month serve 3 month notice under S 90(1)
LA
c) Forty days ‘notice under S 96(2) LA
d) 45 days ‘notice under the Auctioneers Act

POWER OF SALE- DUTIES OF CHARGEE

i) Duty of care owed to Chargor, guarantor any chargee under subsequent

charge- s97(1)LA.

ii) Chargee owes duty to Chargor to obtain best price not more than 25%
below market value (sale may be declared void) S97 (3).
iii) Property must be valued prior to sale S97 (2) LA to determine its forced sale
value - The Chargor may apply to court to declare sale void if sold at a value
that doesn‘t meet this threshold.
iv) S99 LA confers protection on the purchaser if there has been irregularity in
the sale, he can claim damages against the person exercising the power.
v) S 79(9) LA a chargee shall not possess or sell land whose title document has
been deposited with the Chargor under an informal charge without an order
of the Court NB the word Chargor‘ here should read ‘chargee‘
POWER OF SALE CONDITIONS- S98 Sale

The sale may cover the whole or part of the land. The sale may be subject to or free
of any charge or encumbrance having priority to the chargee’s charge. The sale
could be:

• By way of subdivision
• By way of private contract at market value
• By way of public auction-with reserve price
• For a purchase price payable in one sum or by instalments
• Subject to any other conditions of the chargee

There are therefore more ways in which the sale can be conducted.
TRANSMISSIONS
Section 2 Land Act defines transmission as the passing of land, a lease or a charge
from one person to another by operation of law on death or insolvency or otherwise
howsoever, and includes the compulsory acquisition of land under any written law.
Section 2 Land Registration Act: states that transmission means the passing of
land, a lease or a charge from one person to another by operation of law on death,
insolvency or otherwise.

Section 7 of the Land Act identifies transmissions as one of the ways of acquiring
title to land.

The Land Act and Land Registration Act identifies 5 ways in which transmission may
be effected

i) Transmission on Death
ii) Transmission on Bankruptcy
iii) Transmission on Liquidation of a company
iv) Transmission on Compulsory acquisition; and
v) Transmission in other cases

i) Transmission of Death
• Where one of the proprietors under a joint tenancy dies, the property passes
to the remaining proprietor through the doctrine of jus acrescendi or
survivorship.
• S50 LA & S61 LRA: If a sole proprietor or a proprietor in common dies, the
proprietor’s personal representative shall, on application to the Registrar in
the prescribed form and on the production to the Registrar of the grant, be
entitled to be registered by transmission as proprietor in the place of the
deceased with the addition after the representative’s name of the words “as
executor of the will of [deceased]” or “as administrator of the estate of
[deceased]”, as the case may be.
• Any subsequent transfer or surrender of lease or discharge made by the
personal representative may be registered by transmission.
• A person acquiring title to land, lease or charge by transmission upon death
shall be deemed to have been the owner immediately after the death of the
proprietor. (The doctrine of relation back).
• The said person will also hold the land, lease, or charge subject to all
unregistered by enforceable interests and liabilities (encumbrances) over
that land lease or charge.
ii) Transmission on Bankruptcy
• Where a person is adjudged bankrupt or where the court has directed that
the estate of a deceased proprietor be administered according to the laws
 of bankruptcy, the trustee in bankruptcy shall be registered as proprietor of
any land, lease or charge of which the bankrupt or the deceased proprietor
is proprietor, in place of the bankrupt or deceased proprietor.

iii) Transmission on Liquidation of a Company

• Where company has been wound up, any land belonging to the company
will pass to the liquidator, upon fulfilment of the requirements under S53 of
the Land Act and S64 LRA, by way of transmission.

iv) Transmission on Compulsory Acquisition

v) Transmission in other cases
• If a person has become entitled to any land, a lease or charge under any law
or by virtue of any order or certificate of sale made or issued under any law,
the Registrar shall, on the application of an interested person supported by
instruments of transfer or such evidence as the Registrar may require,
register the person entitled, as the proprietor.
 WEEK 8

1. Secondary Rights (Easements, Profits and Restrictive Covenants)

2. Compulsory Acquisition (Eminent Domain)

3. Adverse Possession
SECONDARY RIGHTS (EASEMENTS, PROFITS AND RESTRICTIVE
COVENANTS)

INTRODUCTION

Simply defined, these rights are rights in the land of another. They include:
easements, profit a prendre and restrictive covenants.
a) EASEMENTS

This can be defined as the right of way over someone else’s land. Section 3 of the
RLA defines an easement as ‘a right attached to a parcel of land, which allows the
proprietor of the parcel either to use the land of another in a particular manner or to
restrict its use to a particular extent, but does not include a profit.’ Section 2 of the
land Act defines easement as non-possessory interests in another’s land that
allows the holder to use the land to a particular extent, to require the proprietor to
undertake an act relating to the land, or to restrict the proprietor’s use to a
particular extent, and shall not include a profit. Section 28 of the Land
Registration Act, 2012, easements, i.e. the right of way is listed as one of the
overriding interests that can affect the proprietor’s title. The holder of an easement
has rights over another person’s land. It is a right appurtenant to any piece of land
and exercisable over another piece of land, and capable of forming the subject
matter of a grant.
Easements are provided for in Part X of the Land Act and under Section 98 of the
Land Registration Act. Section 136 provides that for an easement to exist, there
must be a dominant land also known as benefitting land and a servient land also
known as burdened land. Under the Act easements are registrable rights and
include rights of way, rights to light and other similar rights. Section 138 (1)
provides for the rights capable of being created by an easement to include:

 Any rights to do something over or upon any servient land;

 Any right that something should not be done so;
 Any right to require the owner of servient land to do something over, under
or upon that land;
 Any right to graze stock on the servient land.

Section 138 (2) provides for the rights not capable of being created out of an
easement including:

 Right to take and carry away anything from the servient land;
 Any rights to the exclusive possession of the land.

Easements may be created under S98 of the LRA. It provides that for registration
of easements & also under s32 of the Limitation of Actions Act by way of
prescription.
PERIOD OF EASEMENTS

Easements may be created for a specific period of time in which case they
terminate at a fixed date in the future. They may also be created during the
subsistence of a freehold grant or leasehold in which case they run for the same
period of time as the land or lease held by the grantor who created the easement.
TERMINATION OF EASEMENTS.

An easement may be terminated by the person occupying the dominant land and
such termination shall be effected in the prescribed form and such easement shall
be extinguished on the date that the termination is recorder in the Register.

Another way an easement may be terminated is by an application to the

Registration, by a person occupying the servient land, to have the easement
terminated and the Registrar may terminate the easement is he is satisfied that the
easement has expired.
They are basically rights in alieno solo, for instance, where a person purchases
land subject to easements, the person in the dominant tenement will still have a
right to pass over the servient tenement.

b) PROFITS

Also referred to a profit a prendre, whereby it entails the right of entry into another
person’s land to do some specific act, e.g. to pick the soil in that land. Unlike in
easement, it entails the taking of something from another’s land, something
capable of ownership that is taken from the servient tenement. The right may also
exist in relation to specified piece of land. Easement must be pertinent to servient
and dominant tenement at the same time, while profit need not be as it is a right
that does not need the beneficiary to be the owner of the dominant tenement and
can come all the way from wherever and all it entails is the taking away of
something and off he goes. This interest can be created either by an express grant
or by prescription.

These profits entitle the holder of such rights to take something off another’s land.
The owner of the profit may take or server the subject matter of the profit from the
land.

It confers a right to take part of the soil or produce of the servient tenement. In this
respect profits are to be distinguished from easements, which are essentially
privileges without profit. A profit is further distinguishable from an easement in
that a profit may exist ‘in gross’. This means that the owner of the profit need not be
the owner of any adjoining or neighbouring land or indeed any land at all. There
need not be a ‘dominant tenement’.

c) RESTRICTIVE COVENANTS
Created by way of special contracts, restrictive covenants are also known as
negative easements in that they restrict use or enjoyment of one piece of land for
the benefit of the proprietor of another land.

Restrictive covenants are referred to as right to prevent an owner of land from

carrying on some specific activity on his own land. Section 2 of the Land Act
includes restrictive covenant in the definition of restrictive agreement which
means. ‘an agreement by one owner of land d restricting the building on, or the use,
or other enjoyment of land for the benefit of the owner under a land or neighbouring
land and includes a restrictive covenant.’ It is negative in nature as it imposes
limitations upon the manner in which an owner may use land e.g. height,
composition, size or external features of a building on the land. The restriction
precludes one from doing or initiating certain forms of developments which would
be inconsistent with the general use to which that particular neighbourhood is
earmarked.
COMPULSORY ACQUISITION (EMINENT DOMAIN)
INTRODUCTION TO COMPULSORY ACQUISITION OF LAND
The doctrine of eminent domain gives the government power to take over property
that is otherwise privately owned for the purpose of meeting a public requirement.
The driving principle behind eminent domain is public use. Eminent domain,
otherwise known as compulsory acquisition, is an inherent government power.
In most jurisdictions, it is conceded that eminent domain may be vested in other
entities which have governmental authority such as public utility bodies.
The practice originated from Ancient Rome where it is suggested that the practice
of taking private property for public use was widespread. It entailed seizing
private property subject to certain conditions mainly payment of compensation
and there was the public purpose element in such an exercise of the powers
entailed.
The practice was picked up by the English where the sovereign enjoyed
unmitigated power to take private property without restriction or condition. It was
the English Parliament that changed the practice to what is observed today. The
Parliament approved the transfer of funds in lieu of compensation to private owners
whose land had been taken away for public use
a. JUSTIFICATION OF EMINENT DOMAIN
Sovereign states have had original jurisdiction of property long before the
properties found themselves in individual hands so that individual possession must
be seen to derive from grants from the state. Even as the state issues grants to
individual owners, there is the radical title that is retained by the state and that
provides a level of control which enables smooth operation in regard to land use.
Since it is the state that initially issued the grants to individuals, there is reservation
that the state might at some date in future resume ownership of that property and
so it should be no surprise when the state unleashes its power of eminent domain
to take back the property.
The State has a moral obligation to ensure that the land is available to sustain other
forms of life as well. Compulsory acquisition is one way in which the State lifts the
cloak of private property for public benefit.
Despite criticisms on the dangers posted on private property owners by eminent
domain, it is inarguably a necessary evil in society. This therefore calls for a
necessity to balance these interests for the good of all the involved stakeholders
therein.

b. RATIONALE FOR COMPENSATION

If there is a rational explanation behind the exercise of eminent domain, why then
offer compensation? While the base and primary justification for compensation is
individual property rights, there have been a number of schools of thought
contributing to this argument.
The Natural Law school of thought relies on moral imperatives in that it is only fitting
that full indemnity be availed to the private owner as may be the subject of
compulsory acquisition.
Secondly, there is also the private incentive ground which has been invoked that
compensation must be made available so that private investors would not be
inhibited from being partners in development.
Thirdly, there is the valid ground that has been espoused that requirement to offer
compensation would in all likelihood deter or restrain an overzealous government
from pursuing ambitious public projects some of which may be white elephant
projects simply because it has the powers to seize private property and apply it to
such use.
Requirement of making just compensation can deter any prospects of such an
ambitious adventure on the part of the government.

c. EMINENT DOMAIN IN KENYA

Since Compulsory acquisition is the power of the state to extinguish or acquire any
title or other interest in land, in Kenya the state can exercise its power of eminent
domain by taking an action to compulsorily acquire privately owned land for the
benefit of the public. Under Article 40 (3) (b) of the Constitution of Kenya, 2010,
the government is empowered to compulsorily acquire land for public use.
However, it should be noted that the aforementioned article gives clear cut
provisions as to when compulsory acquisition is justifiable. That land acquired
within the confines of the concept of eminent domain must be in accordance with
any statutes or be for a public purpose or in the public interest and that the transfer
be carried out in a manner that is consistent with the provisions of the Constitution
which allow the person who has a legal interest in the land to receive prompt
payment in full of just compensation and also a right to access to a court of law. See
Article 40(3) (b) & (4) of the Constitution.

d. COMPULSORY ACQUISITION IN THE LAND ACT, 2012

Section 2 of the Land Act defines compulsory acquisition as, ‘the power of the State
to deprive or acquire any title or other interest in land for a public purpose subject to
prompt payment of compensation.’ Section 7 of the Land Act lists compulsory
acquisition as a means of land acquisition. Eminent domain is dealt with
substantively under PART VIII (Sections 107 to 133) of the Land Act. The part
also provides procedures for compulsory acquisition, redress for aggrieved land
owners and compensation for acquisition and damage.

PROCEDURE FOR COMPULSORY ACQUISITION UNDER THE LAND ACT.

Section 107 provides for preliminary notice. Any authority desiring to acquire by
eminent domain land must publish a notice in either the Kenya Gazette or County
Gazette.
The said notice shall be served on the Commission and any other party with an
interest in the land (see section 107 (7)). Such a notice will be entered into the
register by the registrar. It was held by the Court of Appeal in Commissioner for
Lands v Coastal Aquaculture Ltd Mombasa Court of Appeal, No. 252 (1996) that the
notice must state the public purposes for which the land is being acquired and, if it
is for a public body, state the name of that body.
Section 109 provides that the Commission must justly and fully compensate any
damages that result from entry into the subject land. Under Section 111 all parties
whose interests have been determined are entitled to full and just compensation
where their land has been compulsorily acquired.
What amounts to just compensation? Kanini Farm Ltd. v Commissioner of Land (1984)
eKLR the appellants land had been compulsorily acquired by the government
under the Land Acquisitions Act (cap 295) (repealed). They challenged the
compensation awarded on the ground that it valued the property as agricultural
land when there had been a change of user to residential and that some of the
recipients of the compensation were trespassers. The Court held that when land is
compulsorily acquired under the Land Acquisitions Act, an enquiry to determine
the persons interested in the land, the value of the land and compensation to be
paid must be held, and that market value as a basis of assessing compensation is
the price that a willing seller might be expected to obtain from a willing purchaser
and the purchaser may be a speculator but a reasonable one.

e. SAFEGUARDS AGAINST ARBITRARY USE OF EMINENT DOMAIN

The powers of compulsory acquisition should be strictly regulated to prevent the
ruling elite from whimsically alienating privately owned lands. In Ocean View Plaza
v. Attorney General [2001] ELCR HC Civil case no.527, the registrar had written a
letter to the plaintiff requiring him to surrender the title deeds of the two subject
properties on the grounds that the allocation had been created on a road reserve,
it was however held that the attempt by the commissioner of lands to cancel the
two subject title deeds lacked the legal efficacy it would require to succeed and
was therefore null and void. This is an example of the numerous cases in which the
power of compulsory acquisition was often abused.
Sub Article 2 of Article 40 of the Constitution gives the state or any person the
power to deprive a person of property of any description or interest but in
contemplation of Article 27 (4) which provides for non-discrimination of any person
either directly or indirectly on any ground whatsoever. Certain preconditions must
be followed for property rights to be deprived. These are that property must be
shown to be required for public benefit; that on a balance of convenience the
balance should be such that it justifies the concurrent hardship that is visited on the
property owner so affected; and upon the exercise of such powers, of compulsory
acquisition of the property of an individual, there must be prompt payment of
compensation to such a property owner.
Article 66 of the Constitution further provides instances where the state may
regulate the use of land. They include interests of defence, public safety, and
public morality. Under S124 of the Land Act the Commissioner must be satisfied,
before approving the compulsory acquisition, that: the possession of the land is
necessary for public interest; the possession is necessary in the interest of defence,
public safety, public order, public morality, public health, urban and planning, or
the development of any property in a manner as to promote public benefit and if
the necessity is as such as to afford reasonable justification for the causing of any
hardship that may result to any person having an interest over the property. The
case of K. Nderitu & 23 others v AG & 2 others, Constitutional Petition No. 29/2012,
enumerates these safeguards. The court held that Art. 40 of the Constitution did
grant rights to property to every person. This right could however, be limited by
compulsory acquisition. Before this could take place, the court had to first
demonstrate that this acquisition was for a public purpose and the process had to
be in accordance with Part 8 of the Land Act, 2012.

For compulsory acquisition to be effective, it must strictly follow the procedures

under the law. In Commissioner for Lands v Coastal Aquaculture Ltd, Mombasa Court
of Appeal, No. 252 (1996) Pall JJ observed that for compulsory acquisition to be
lawful it must strictly comply with the provisions of the Constitution and the Land
Acquisition Act. In this case the preliminary notice had neither indicated the
purpose nor the name of the public body. The court declared the notice defective
and by an order of certiorari quashed the acquisition.
Conditions that Government must satisfy to exercise that Power

i) Land must be private property.

ii) Government must have the capacity to take physical possession of the
property.
iii) The property must be for public purpose and used for the reason ear-
marked. If the acquisition is not for the public benefit, then it is an illegality.
iv) The private owner of the land must be paid fully compensated. The
compensation should be adequate and paid without delay.
ADVERSE POSSESSION
DEFINITION OF ‘ADVERSE POSSESSION’
Adverse possession is a peculiarity in the law in that it is a system whereby a legal
right is obtained through conduct which must be wrongful. Essentially it consists of
the non-permissive occupation of another's land until a statute of limitations bars
his right to recover it. In Black’s Law Dictionary, 10th Edition adverse possession is
defined as: “The enjoyment of real property with a claim of right when that enjoyment
is opposed to another person’s claim and is continuous, exclusive, hostile, open and
notorious.”

JUSTIFICATION FOR ADVERSE POSSESSION

Adverse possession rests on considerations of public policy: that title to land
should not long be in doubt, that society will benefit from someone's making use of
land the owner leaves idle, and that third persons who come to regard the occupant
as owner may be protected.
Article 60(1) of the Constitution of Kenya strongly supports the doctrine. By
stating that land should be used in equitable, efficient productive and sustainable,
the provision in line with the need and purpose of adverse possession advocates
against neglecting of land by land owners.

ELEMENTS OF ADVERSE POSSESSION

In Kenya this doctrine majorly derives its validity from the Limitation of Actions Act,
Cap 22. Order XXXVI Rule 3D of the Civil Procedure Rules which was replicated
in Order 37 Rule 7 of the Civil Procedure Rules, 2010 prescribes the manner in
which a suit for adverse possession under Section 38 of the Limitation of Actions
Act is to be commenced. Article 60(1) of the Constitution of Kenya strongly
supports the doctrine. By stating that land should be used in equitable, efficient
productive and sustainable, the provision in line with the need and purpose of
adverse possession advocates against neglecting of land by land owners. In the
case of George Ogake Pius -vs- Esther Nyasani Makori, the Court had occasion to
deal with the issue of what constitutes adverse possession where it stated that
“There is no express definition of adverse possession in the Limitation of Actions
Act. However, Section 13(1) of the Act provides that a right of action in recovery of
land does not accrue unless the land is in the possession of some person in whose
favor the period of limitation can run (which possession in the Act is referred to as
adverse possession). It is evident thereof, that the doctrine of adverse possession is
invariably tied to Section 7 of the Act … which bars an owner of a parcel of land from
an action to recover it after the expiry of twelve years.”

a. FACTUAL POSSESSION
One must have occupied the land to the exclusion of others. This is central
prerequisite for a claim of adverse possession. Therefore to begin with there must
be land which the claimant must have physically used the land in the same manner
that a reasonable owner would give its character, location and nature and whose
possession must not have been shared with the owner or public in general.
The parcel of land must be registered in the name of a person other than the
claimant. Under Section 37 of the Limitation of Actions Act, adverse possession
would only apply where the land is registered. Section 38 of the Limitation of
Actions Act provides that where one claims entitlement to land by adverse
possession they may apply to be the registered proprietor in place of the person
then registered as proprietor of the land. The principles applicable in a claim for
adverse possession in relation to registered land were considered and set out in
case of Wambugu -vs- Njuguna, where the Court of Appeal held that; “In order to
acquire by the statute of limitations title to land which has a known owner, that owner
must have lost his right to the land either by being dispossessed of it or by having
discontinued his possession of it. Dispossession of the proprietor that defeats his title
are acts which are inconsistent with his enjoyment of the soil for the purpose of which
he intended to use it.”

b. ‘ANIMUS POSSIDENDI’
The occupation must be without the consent of the owner: Animus possidendi is
paramount. Possession does not become adverse when the intention to hold
adversely is wanting.

c. OPEN, NOTORIOUS AND HOSTILE USE OF THE PROPERTY (nec vi, nec
clam, nec precario)
The claimant must be in open and exclusive possession of that parcel of land in an
adverse manner to the title of the real owner. The claimant’s possession must be
visible and obvious so that if the owner made a reasonable inspection of the land
he would become aware of the adverse claim.
The Court has in Teresa Wachika Gachira v Joseph Mwangi , expressly stated that
irrespective of the procedure adopted, the onus is on the person claiming adverse
possession to prove that he has used the land he is claiming nec vi, nec clam, nec
precario.

d. CONTINUOUS USE OF THE PROPERTY

The claimant must have been in that occupation/possession for a period in excess
of twelve years having dispossessed the owner or there having been
discontinuance of possession by the owner.
In Joseph Gahumi Kiritu v Lawrencce Munyambu Kabura the Court held that;
“Time which has begun to run under the Act is stopped either when the owner asserts
his right or when his right is admitted by the adverse possessor. Assertion of right
occurs when the owner takes legal proceedings or makes an effective entry into the
land. The old rule was that a mere formal entry was sufficient to vest possession in
the true owner and to prevent time from running against him. …He must therefore
make a peaceable and effective entry, or sue for recovery of land.”

DEFENSES TO ADVERSE POSSESSION.

We have various defenses which are often brought up in cases of adverse
possession. These are available to the paper owner to try and defend his land from
being grabbed by squatters through claims of adverse possession.
a) Permissive Use
Where the actual owner has allowed the person claiming title by adverse
possession unto his land, the claim of adverse possession then seizes being hostile.
b) Public and Trust Land
Land owned by the Government is not subject to adverse possession claims.
Section 41 of the Limitation of Actions Act excludes Public Land from the
application of the Act.
c) Non-Exclusive Use
This is where it can be shown that although the claimant wan in possession of the
land, other people also used the same land in a manner that is consistent to that of
the owner.
d) Insufficient Time
The most basic element of adverse possession is statutory time. This is so because
without the lapse of the statutory time there can be no adverse possession. A claim
cannot succeed if that time does not lapse because the true owner is still within the
time limit to move to court and try to reclaim possession of his land. In Joseph
Mutafari Situmav Nicholas Makhanu [CA No.351 of 2002], a claim of adverse
possession by the appellant failed because he could not prove adverse possession
for the requisite statutory period.
 WEEK 10

1. Rules of construction and rules governing the construction of the

parcel’s clause.
RULES OF CONSTRUCTION AND RULES GOVERNING THE
CONSTRUCTION OF THE PARCEL’S CLAUSE.
A. CONSTRUCTION OF CONVEYANCE INSTRUMENTS

Construction refers to giving meaning to words and phrases used in instruments.

The following are the main rules of construction:
1. Express Intention

Look at the express intention of the parties. The court looks at the words actually
used by the parties. The question to ask is: “What is the meaning of what parties
have said?’’ and not ‘’what did the parties mean to say?’’ The Court looks at the
express, not presumed intention of the parties.
2. Whole Document

The document must be read as a whole. Where the transaction between the parties
is contained in more than one document, e.g. a Lease and a Renewal of Lease or
Further Lease, the two documents must be construed together.
In Plumrose Ltd v.Real and Leasehold Inv. Society Limited (1969) 3 All ER
1441.Held: Where one lease was described as supplemental to the other, the two
leases were to be read together in order to determine whether the supplemental
lease incorporated a covenant for renewal.
3. Ordinary Meaning

Words must be given their ordinary meaning as well as their grammatical

meaning. Ordinary-refers to the popular meaning or the meaning which the ordinary
usage of society applies to it. There are two exceptions to this rule:

i. The Courts will give words and phrases any special, technical or
customary meaning which the parties must have intended .e.g.
- “Person” includes a limited company
- “Month “means calendar month
- “Singular” includes plural (e.g. ‘purchaser ‘, may be used where there are
more than one
- “Masculine’’ includes feminine (and vice versa)

ii) Where the court is of the opinion that the ordinary meaning would
lead to some absurdity, repugnancy or inconsistency with the rest of the document,
it will modify that meaning to avoid that result.
4. Extrinsic Evidence

Such evidence is not admissible to add to, vary or contradict the terms of the
document. There are three exceptions:
 a) Extrinsic evidence is admissible to explain the meaning of the words used
or to resolve a latent ambiguity in a document. E.g. “repair” –In order to
determine the meaning of the word “repair” in a covenant to repair, it is
necessary to have regard to the age character and locality of the leased
property at the time of granting the lease. Extrinsic evidence therefore
explains the technical meaning of the word “ repair”
b) Surrounding circumstances existing at the time of executing the document
may be looked at to place the court in the position of the parties.
c) Extrinsic evidence is admissible to show that a document is not binding on
grounds of fraud or mutual (common) mistake.
5. Clerical Errors Corrected

A sensible meaning will be put on any error by correcting the error. Thus incorrect
spelling or grammar may be corrected and any words left in the document by
mistake will be ignored, but only if such correction gives effect to the parties’
express intention as appearing from the whole document.
6. “Contra-Proferentem” Rule

Where a document has been drafted in a language chosen by one of the parties,
the document must be construed against the person who drafted it, in the event of
any ambiguity.
7. “Ejusdem Generis Rule”

Where general words follow words of a particular class the general words must be
construed as limited to the same kind as the particular words.E.g In the phrase
“cows, goats, sheep and other animals”, the words “and other animals”(general
words)refer to domestic animals(particular words)

Note: If the general words are not to be so limited, there must be a provision to
effect such intention, e.g. “including but not limited to.”
8. “Expressiounius, exclusioalterious” Rule

An express provision automatically ousts an implied provision. E.g. implied terms

in a lease will be ousted by express provisions contained in the lease document
executed by the parties.
CONSTRUCTION OF THE PARCELS CLAUSE

A problem requiring interpretation or construction of the Parcels Clause may arise

where an instrument contains more than one mode of description of the property
and the descriptions are contradictory. The court has to determine which of the two
descriptions prevails. It may be necessary to look outside the document to
determine the extent of the land transferred, leased or mortgaged.

There are several rules governing the construction of the parcels clause.
 1. “Falsa demonstration non nocet cum de corporeconstat”

It means a false description does not void or vitiate a document if the intention is
clear. Where there is more than one description (Whether including a plan or not),
the court will apply the maxim to reject any description which is manifestly
inaccurate. ‘The erroneous description will be rejected as a false demonstration”.
See: Maxted v Plymouth Corporation (1957) CLY 243, where the England Court
of Appeal rejected a plan which, clearly inaccurately, excluded from the
conveyance a strip of land adjoining a road, which strip was included in the
Contract of Sale.
2. Recitals

To the extent that they describe the property, recitals may assist in determining
the extent of the land comprised in a document.
3. Extrinsic Evidence.

This may be admissible to identify the land as an exception where there is an

ambiguity or inconsistency or contradiction in the document.
4. Plan or Map

Where there is a verbal description and a plan, the person drafting the document
must make it clear which description is to prevail-i.e. whether the plan is merely
illustrative or whether it contains the operative description. e.g.

a) The words “more clearly described in the plan” would indicate that the plan
is meant to prevail over any deficiencies in the verbal description. See
Eastwood v Ashton (1915) AC 900
b) The words ‘for the purposes of identification only’ in relation to a plan would
clearly indicate that the verbal description is paramount and the plan is only
illustrative.

Note, however, that where the words used are ‘for the purposes of identification
only’ and the verbal description is unclear, the plan can be referred to in order to
determine the extent of the land conveyed. See: Wiggington and Milner v
Winster Engineering (1978) 3 All ER 436

5. Presumptions

The Courts apply certain presumptions to aid them in the construction of the
Parcels Clause. Example: Where the boundary is delineated by a hedge and a
ditch, there is a presumption that the boundary is on the opposite side of the ditch
away from the hedge. See Vowles v. Miller (1810) 128 All ER 54
This is supposedly because a landowner, when planting a hedge, would stand on
his boundary line and dig a ditch along the line, and the soil from the ditch would
form the bank for his hedge.