The typical Conveyancing Process in Kenya

The conveyancing process refers to the legal steps involved in transferring property ownership from one party to another. In Kenya, this process is meticulously governed by various laws, primarily the Land Act, 2012, and the Land Registration Act, 2012, among others. It's crucial for both buyers and sellers to engage qualified conveyancing advocates to ensure a smooth, legal, and secure transfer.

Breakdown of the typical conveyancing process in Kenya:

Phase 1: Pre-Contract / Due Diligence Stage

This is the investigative phase where the buyer (and their advocate) carries out thorough checks on the property and the seller.

1. Instruction of Advocates: Both the seller and buyer instruct their respective conveyancing advocates. It's highly recommended that each party has independent legal representation to avoid conflicts of interest.
2. Preliminary Searches by Buyer's Advocate: The buyer's advocate conducts various searches to verify the property's legal status and identify any potential issues. These include:
• Land Registry Search: This is the most crucial search. It verifies the seller's ownership, confirms the property details (size, registration number), and checks for any encumbrances (e.g., mortgages, charges, cautions, restrictions, court orders). An official search provides certified copies of the title register.
• Local Authority Searches: To check for outstanding land rates, planning restrictions, or any arrears with the county government. A Rates Clearance Certificate will be required later.
• Land Rent Clearance Certificate (for leasehold properties): To confirm that all annual land rent payable to the government is settled.
• Company Searches (if applicable): If the seller is a company, a search at the Registrar of Companies verifies its legal existence, directorship, and capacity to sell.
• Physical Inspection: The buyer's advocate often advises the buyer to conduct a physical inspection of the property to confirm its condition, boundaries, and occupancy status (e.g., if it's tenanted, the terms of the tenancy).
• Verification of Identity: The advocates verify the identity documents (ID/Passport, KRA PIN) of both the seller and buyer to prevent fraud and comply with Anti-Money Laundering (AML) regulations.
3. Obtaining Title Documents & Information from Seller: The seller's advocate obtains the original title deed (or certified copies) and provides other relevant documents and information about the property to the buyer's advocate. This may include:
• Seller's KRA PIN.
• Spousal consent (if applicable, for matrimonial property).
• Any existing mortgage details (redemption statement from the bank).
• Details of any existing tenants.

Phase 2: Contracts Stage

This phase involves drafting, negotiating, and signing the legally binding sale agreement.

1. Drafting of Sale Agreement: The seller's advocate usually drafts the Sale Agreement (also known as the Offer Letter or Letter of Intent). This document outlines the key terms and conditions of the sale, including:
• Full details of the seller and buyer.
• Full description of the property (including title number).
• Purchase price and payment schedule (e.g., deposit, installment payments, final payment).
• Completion date.
• Conditions precedent (e.g., buyer securing financing, due diligence satisfaction).
• Responsibilities for costs (e.g., legal fees, stamp duty, Capital Gains Tax).
• Consequences of default by either party.
2. Review and Negotiation of Sale Agreement: The buyer's advocate meticulously reviews the draft Sale Agreement to ensure it protects their client's interests and accurately reflects the agreed terms. Any discrepancies or additional clauses are negotiated between the advocates until both parties are satisfied.
3. Payment of Deposit and Execution of Sale Agreement:
• Once both parties agree on the terms, the buyer pays an agreed deposit (typically 10% of the purchase price in Kenya). This deposit is usually held by the seller's advocate in a joint client/stakeholder account, or by a neutral third-party stakeholder, until the completion of the transaction.
• Both the seller and buyer (and their witnesses) then sign the Sale Agreement, making it legally binding.
4. Application for Consents (if applicable):
• Land Control Board (LCB) Consent: For transactions involving agricultural land, obtaining consent from the relevant Land Control Board is mandatory. Without this consent, the transaction is void.
• Lessor's Consent (for leasehold properties): If the property is leasehold, consent from the lessor (e.g., County Government, National Government, or a private entity) might be required before transfer.
• Management Company Consent (for apartments/sectional properties): Consent from the management company or developer may be required, especially to ensure all service charges are paid up.

Phase 3: Completion / Post-Contract Stage

This is the final phase where the legal ownership is officially transferred.

1. Payment of Balances: The buyer's advocate ensures that the buyer has remitted the remaining balance of the purchase price. If the buyer is taking a mortgage, the lender will release the loan funds to the buyer's advocate.
2. Obtaining Clearance Certificates: The seller's advocate obtains:
• Land Rates Clearance Certificate: From the respective County Government, confirming no outstanding rates.
• Land Rent Clearance Certificate: From the Commissioner of Lands (for leasehold properties), confirming no outstanding land rent.
• Redemption Statement: From the seller's bank if there's an existing mortgage, indicating the amount required to discharge the charge. This amount is usually paid directly from the sale proceeds.
3. Preparation and Execution of Transfer Documents:
• The seller's advocate prepares the Transfer Form (or Deed of Assignment for leasehold), which is the official document that legally transfers ownership.
• Both the seller and buyer (and their witnesses) sign the Transfer Form.
• Other accompanying documents include copies of ID/Passports, KRA PIN certificates, and passport-sized photos for both parties.
4. Valuation for Stamp Duty: The property is valued by the Government Valuer for the purpose of calculating Stamp Duty. Stamp Duty is a tax paid by the buyer to the government for the transfer of property. The amount is usually 4% of the value for property within a municipality and 2% for property outside.
5. Payment of Stamp Duty: The buyer's advocate ensures the Stamp Duty is paid to the Kenya Revenue Authority (KRA). This is a critical step, as the transfer cannot be registered without proof of stamp duty payment.
6. Lodging for Registration: Once all documents are in order, the transfer documents, original title deed, clearance certificates, and proof of stamp duty payment are lodged at the relevant Land Registry for registration of the new owner.
7. Registration of Transfer: The Land Registry processes the application. Once satisfied, the Registrar registers the transfer, cancelling the old title and issuing a new one in the buyer's name. This is the point at which legal ownership officially changes hands.
8. Release of Funds: Upon confirmation of successful registration and issuance of the new title deed in the buyer's name, the balance of the purchase price (held in the stakeholder account) is released to the seller.
9. Post-Registration:
• Capital Gains Tax (CGT) Payment: The seller's advocate withholds the Capital Gains Tax (currently 15% of the net gain) from the sale proceeds and remits it to KRA.
• Handover of Property: The seller officially hands over possession of the property and keys to the buyer.
• Utilities Transfer: The buyer's advocate advises on changing utility accounts (water, electricity) into the new owner's name.
• Delivery of Documents: The buyer receives the original title deed, the registered transfer form, and all other completion documents.

The conveyancing process, while seemingly linear, can be complex and sometimes experience delays due to various factors, including bureaucratic processes at land registries or issues arising during due diligence. This is why having experienced conveyancing advocates is paramount to a successful and legally sound property transaction.

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