CONVEYANCING

INTRODUCTION

- Conveyancing Rules

- Reforms

- Underlying Nature of Conveyancing

o Is it jurisdictional?

o Is it a private contract?

The first theory is that it is a quasi-jurisdictional act. Section 23 of

the Law of Contract Act. The second theory is that it is a private act
(contractual) and the state has no law (right?) whatsoever to
interfere.

Conveyancing is a hybrid of both contracts and jurisdiction. It has

everything to do with domestic law. There are mandatory rules that
must be observed.

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

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

Conveyancing is the voluntary transfer of interest in property.

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

Three critical elements of the definition:-

1. Process – All applications from the appointment of the

estate agent to the time you actually get a duly registered
title.
 2. Legal Title interest being transferred – What is transferred
must be legal.

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

By doing a search at the lands registry.

3. Transfer – Voluntary transfer. You can also transfer title to

yourself e.g if you are a beneficiary of an estate. Also includes
the modification of ownership e.g in joint tenants.

Conveyancing is the art or science of conveying or effecting the

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

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

Defensive Conveyancing

This involves protecting yourself as an Advocate, for instance, from

negligence claims. Do not allow your client to dictate to you!
Be on alert for any sort of fraud, for instance mortgage
fraud**. Try to stop any criminal acts. Exercise caution.

In Momanyi v Hatimy & Anor [2003] KLR 545 the advocate was
sued in negligence and misrepresentation. The advocate had failed to
conduct a search and advised the client that the property was
unencumbered. The client paid the purchase price. It later on turned
out that the property was actually encumbered and title could not be
transferred. The client filed a suit and sought summary judgment.
The court struck out the advocates defence and granted summary
judgment. On appeal, the Court of Appeal stated that in a claim for
damages in negligence, any defendant who had denied negligence was
entitled to unconditionally defend the suit.

In the case of Juma Muchemi v Charles Waweru Gatonye T/A

Waweru Gatonye & Co. Advocates HCCC No. 853 of 2002, the
advocate failed to conduct a search. The advocate was sued and his
defence was that “ In any event, you my client could not have been in
a position to complete this transaction because the plaintiff had failed
to secure requisite finances” Kasango J dismissed the suit. (!)
There are instances where interest in property will pass without
formal methods of conveyancing being followed. E.g.

(a) Adverse Possession

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

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

(b) Proprietary Estoppel

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

In the case of Teng Hwan v Swee Chuong [1992] 1 WLR 11, two
brothers bought land jointly in their names and registered them in
their father’s name as a trustee. The defendant began construction on
the plot 3 years later. The plaintiff encouraged him to continue and
consented to the construction. He also indicated that he would
surrender his interest to the property to the defendant in exchange
for a plot that did not exist. The defendant completed the
construction and took full possession. When the father died, the
plaintiff moved the court and sought his share of the property or
money in lieu thereof.

The defendant counter claimed for a declaration as the sole owner

using the shield of proprietary estoppel. The Privy Council held that
the plaintiff was estopped from denying the defendant title and
ownership to the entire property even though the arrangement was
from the word go unenforceable, as there was no consideration.

(c) There are possibilities of conveyancing unregistered property

through a special power of attorney which you register. The power of
attorney would state that “ In case the City Council decides to give
title, you have the power to get title to the property.”
You can also transfer property based on a letter of allotment on
conditions that:

- The property exists

- The allottee has satisfied the conditions in the allotment by

making sure there is a correspondence file for that piece of
land in the land’s registry.

THE HISTORY OF CONVEYANCING

Much of it is drawn from the English. In the case of Nyali Ltd v AG

[1955] 1 All ER 646 Denning LJ stated that

“you can transplant an English Olive in Africa but you must

never expect it to thrive with the same foliage and green as
it does somewhere in Manchester or England.”

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

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

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

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

After 1535, the first statute relevant to conveyancing was enacted.

Before this you could partition property or swap property.

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

In 1536, the Statute of Enrolment was enacted with the purpose of

keeping the feudal system. It endorsed the regulation that each
conveyance had to be sealed by the Crown and enrolled within six
months with the Chief Lords.

In 1677, the Statute of Frauds was enacted. It required that all

conveyancing documents had to be by way of deed and in writing,
sealed by the party transferring the property before three or more
credible witnesses. This has continued to date.

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

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

In Kenya, we developed our conveyancing along the English model.

Prior to 1901, the Englishmen who were the only ones who could own
land did everything.

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

dictated that (Section 4) any document transferring an interest
in land had to be registered within one month of transferring it.
It did not grant any title to land and no forms were prescribed.
2. The Land Titles Act 1908 – it was intended to apply to the
coastal areas. It produced the concept of adjudication. The
natives at the coast had begun conflicts over land and the
adjudication process was meant to resolve conflicts and record
with the recorder of titles who the owner was.
 3. The Government Lands Act of 1915 – it was meant to control the
interior hinterland. It introduced the deed plan - a document
drawn by a qualified surveyor for purposes of identifying each
parcel of land. It also introduced a systematic approach to
registering ownership in land. If the government alienated land
and gave someone it would be by way of grant or indenture
of lease and would be registered.

4. The Registration of Titles Act of 1920 (Cap 281) – It intended to

get rid of the previous Acts. It was based on the Torrens System
and emphasized proper systematic registration of title and
proof of registration of title. It guaranteed registered title &
prescribed for the first time statutory forms to be used in
conveyancing. Title documents are a Certificate of Title or a
Grant.

5. The Registered Lands Act (Cap 300) - it provided for

mandatory statutory forms to be used in conveyancing. It
simplified conveyancing. Title documents issued under RLA
include a Certificate of Lease, a Title Deed and a Land
Certificate.

The RLA had clauses which made title indefeasible notwithstanding

even proof of fraud to protect colonialists who were remaining behind
after independence.

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

Why is it that section 3 of the Law of Contract Act and section 97 of

the Evidence Act demand that a transaction relating to land must be
in writing?

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

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

Qn: With our modern day strict rules of evidence do we

still need the forensic function against fraud in the LCA
which was largely drawn from the statute of frauds of
1677?

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

Section 3 of the Law of Contract Act dictates:

1. That the agreement must be in writing;
2. That the agreement be signed by both parties;
3. The execution of the agreement must be independently
witnessed.
NB// the agreement must be in one document but there is an
allowance for cross-reference e.g. there is often reference to the LSK
Conditions for Sale 1989

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

Registration serves the following purposes:

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

For Procedure:
 RLA is governed by the RLA
 RTA is governed by the RTA
 GLA is governed by the GLA.
If land is registered under the RLA you will look for the register under
the RLA created by section 5 of the RLA. Section 5 of the RLA
authorizes the Minister of Lands to create Land District Registries.

NB// There is need to overhaul section 5 and give directions

on how district registries should be created as the current
ones have been abused by incompetent staff.

Section 4 of the RTA provides for registries to be created by the

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

Section 93 of the GLA provides for the creation of a Government

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

The RDA by virtue of section 4 provides for the registration of an

intended interest in land within 2 months. However it does not pass
any interest despite registration. E.g. Registration of a sale
agreement.

There are two RDA registries i.e. The Principle Registry at Nairobi
and the Registry at Mombasa.
Qn. Identify the relevant registries under the different
statutes.

How is Registration Effected?

Under the GLA, there are registers in the form of volumes and folios.
The document that one presents for registration is then endorsed
with an official stamp applicable under s.218 GLA and an entry is
made under the relevant volume page and signed by the Government
Lands Registrar.

A photocopy of the document that has been registered is kept in a

deed file. (Each particular parcel of land has its own deed file). The
deed file is relevant for the purposes of tracing the root of title as it is
presumed that the deed file has all the title records. The deed file
should list everything in its history from the original grant by the
Monarch of England
Under the RTA the actual registration is done in two documents:
1. The original title document
2. The duplicate title document.
The RTA followed the Torrens system from Australia and thus when
a grant is registered the duplicate was kept by the Government and
the original by the proprietor of the land.
The duplicate that the government holds is what is called the Register
under the RTA. There is no register proper. The duplicate is kept in a
deed file.

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

Under the RLA, there is a slightly improvised system of registration.

It is only under the RLA that there is a proper register (the form is in
the 1st Schedule of the Act).

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

1. The property section

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

2. The proprietorship section

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

3. The encumbrance section

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

The registration under the RLA is two fold in certain instances. The
actual register is kept in the District Land Registry. The register is
either a green card or a white card in the District Land Registry.
When documents are registered entries are entered in the cards. It is
advisable upon registration to ask for a search to ensure that the
registration has been effected. The document may have been signed
but entries not made. This is especially so because there is no
requirement under the RLA that entry be made in the copy of the
title.

The Registrar keeps in the parcels file the document that has been
registered. Unlike the RTA and the GLA, under the RLA the Registrar
keeps the original document. The owner goes away with the duplicate.
Note that the register is the mirror image of the parcels files.

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

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

The Crown is prohibited from interfering with such land. This is

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

2. The Fee Simple

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

The land is owned without the Government interest interfering until

there is nobody to inherit. The doctrine of bona vacantia will apply
and the land will revert to the state.

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

4. Interests of Third Parties as against registered

proprietors.
These are either encumbrances and or servitudes.

Encumbrances are created by the registered proprietor in favour of a

third party which results in the registered proprietor’s rights being
limited e.g. A charge requires the consent of the third party before
transferring, inhibitions and restrictions are also encumbrances.

Servitudes are not necessarily created by the registered proprietor on

their own parcels of land. They are created for the interest of third
parties on others parcels of land e.g. easements and restrictive
covenants. Easements could be created by statute

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

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

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

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

Per LORD COTTENHAM, LC: If an equity is attached to property by

the owner, no one purchasing with notice of that equity can stand in a
different situation from that of the party from whom he purchased.

(1848) CB 430 (HL). The owner of land in Leicester Square had

convenanted with neighbouring landowners to `keep the park
uncovered with buildings'. At common law, the covenant was
enforceable only between the original parties to the covenant, just as
a contract would be. When the land was sold, the purchaser wished to
build on it, despite his knowledge of the covenant. It was held that it
would be inequitable to allow him to do so. This established that the
burden of a covenant which was restrictive in nature (see
RestrictiveCovenant) could `run with the land', despite privity of
contract. For the burden to run, the covenant had to `touch and
concern' the land, rather than being for the benefit of a particular
person, and it had to be intended that the covenant bind the land.

Note that this principle applies only if the covenants are restrictive,
not positive, and this is a matter of substance, not form, To `keep the
park uncovered' sounds like a positive obligation, but in substance it
is a prohibition.

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

Under RLA section 143 gives the registered proprietor of land an

indefeasible title notwithstanding fraud or mistake such that even a
forged conveyance…
Section 20 states that absolute ownership is subject to the
provisions of the RLA. The interest passes subject to the provisions of
the Act. The interest is only subject to priority rights.

Registration is done by filling in the appropriate forms and lodging

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

In the case of overriding interests, although not registered, they are

recognised. They are all such encumbrances; rights, interests and
powers not entered in the register but subject to which dispositions
that are registered are to take effect. See: National Provincial
Bank Ltd v Hastings [1954] Ch 9.

Section 30 of the RLA provides for overriding interests.

Customary law rights are however problematic. It has been held that
one’s registered interest is subject to customary rights.

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

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

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

See: Barclays Bank v O’Brien which held that in mortgages, if

the wife does not obtain independent legal advice, then an issue as to
the validity of the mortgage arises. She can lay claim to the property.

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

[Question: In light of the provisions of sections 32 and 33 of

the RLA, is it correct to state that it is only registration that
gives one ownership rights in land?]

Registration of property by way of grant or title has the effect of

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

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

Registration has the effect that any document registered under any
regime constitutes conclusive evidence of the interest availed or
passed by that instrument unless it is proved otherwise in a court.
The fact of registration speaks for itself.
The Effect of Non-registration
1. No passing of interest.
2. Non-registration of particular documents, which ought to be
registered by statute as a matter of course or compulsory
requirement, makes such a document invalid. See: Section
32 and 40 RLA on the compulsory registration of leases for
more than 2 years. The document is not void but is invalid
i.e. it works as between the two parties (interpartes) but not
3rd parties.

The proprietor’s rights in rem remain unsecured if there is no

registration. This would apply to charges.
See: Merali v Parker [1956] KLR 26
Clerk v Sombi [1963] EA 107

In the case of Rogan Kamper v Grovenor [1977] KLR 123

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

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

How & When is Registration Effected

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

Registration is effected by filling out the necessary documents

required to be presented for registration and presenting the
document to the relevant land registry. Registration takes effect from
the time you book the document and therefore you must identify the
applicable law as well as in the land registry to beat the doctrine of
priority. Do it in the correct registry. RLA registries are in every
district.
If it were a conveyance by a company, it would also have to register
the instrument at the company registry. Section 96 of the
Company’ s Act states that the registration of the property is
complete when it is registered at the company’s registry.
This was to guard against fraud, insolvencies etc. The same
applies for charges and mortgages.

For co-operative societies, lodge the charge or mortgage

with the Registrar of Societies.

Question: Is the Torrens System still relevant as it was intended to

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

Question: On a proper construction of section 32 and 38 of the RLA

and RTA rights concerning land have no proprietary quality unless
registered. True or false?

BASIC PROTOCOLS OF CONVEYANCING

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

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

You need to ensure that the estate agents you are dealing with is
registered mainly because if something happens the client will come
to you and you could be sued for negligence.
With regard to deposits ensure that you hold it but if the estate agent
holds it you must ensure that he is registered. Chapter 533 provides
for how much fees an estate agent is entitled to as commission. If he
wants more you must advice your client accordingly for example the
estate agent may be given the option to purchase the property.

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

As an advocate and a conveyancer one can also be recognised as a

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

In Mapis Investments Ltd v Kenya Railways Corporation

CA 14/2005 the court was very clear that it is only a registered
estate agent who can earn a commission

1. What happens when an estate agent misappropriates the

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

2. The Initial Client Interview

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

The information needed includes:

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

LESSON 4
In conveyancing it is never advisable to act for both parties. You
ought to discuss with the client whether you are authorized to
disclose details and information about the transaction itself and
related details e.g. existence of a mortgage or source of finance to a
third party.

One may need to disclose in order to expedite the

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

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

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

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

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

When do you investigate title or property

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

Mediums of investigation of title/property

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

A. SEARCHES
A search is the purposeful inspection of the title records or register
records at the relevant lands registry with the primary purpose being
to identify or detect an adverse entry on the title or the register itself.
There are a variety of searches to be conducted but the modern
conveyancer is more concerned with a search under at the Land
Registry, Company Registry, Survey Department etc. The search
should be conducted at the relevant land registry i.e. the registry
where the property is registered e.g.
GLA – Nairobi or Mombasa
RLA – The District Land Registry itself.
There are two types of searches:

a) Official Search/Postal Search

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

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

All systems of registration recognise these two modes of searching.

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

In October 2005, the Commissioner of Lands and Chief Lands

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

If you personally peruse a file, you are able to get so much

information, such as the root of title etc

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

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

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

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

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

c) The Historical Search

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

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

Skyviews Properties Ltd v The AG & 2 Ors HCCC 1622 of

2001 (Unreported)
Ojwang’ J. relied a great deal on the correspondence file to determine
the issues raised.

Once you are through with the search you should inform your client
of any adverse entry. You should then clarify with the other side
whether the transaction can proceed or not. You should satisfy
yourself that whatever adverse impacts/entries revealed will not
adversely affect your client e.g. if there is a mortgage, whether the sale
price will clear the mortgage in full.

Other Searches
1. Companies registry
2. Survey Departments
3. Local Authority – discloses zoning/development policies of
land. Urban planners and surveyors can carry out these
searches. This is especially important when you know what use
is to be made of the land

A search at the companies registry will reveal whether the company

still exists, whether there are insolvency proceedings etc

A local authority search will reveal any adverse proposals

e.g. advice to the Government of compulsorily acquiring
land for public purposes

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

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

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

A search at the Survey Department involves a consideration of the

boundaries.

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

When posing the contract questions ask relevant questions.

Ask questions for instance about the tenants or occupants
in the premises, the terms of their occupation or tenancy,
enquire about any physical defect touching on the property
which the vendor may be aware of but on the face of
inspection of the property is not easily detected (latent
defects)

Ask about the developing prospects of the neighbouring

properties. Whether there have been any boundary changes
in the last few years. The vendor is under no duty to reply
but if they reply, it must be accurately i.e. a reply one can
rely on. Therefore, as a conveyancer do not give
anticipatory or stereotype answers.
If one gives inaccurate answers, the recipient who relies on them can
claim damages and if the contract is already signed, one may rescind
the contract. The recipient has a right to sue in tort for negligent
misrepresentation where the answers are inaccurate. The UK have a
Misrepresentation Act but there is no such equivalent in Kenya.
In Kenya, however, it has been held that proximity and foreseeability
can be extended to contract.

Capano Industries Case: Extended the doctrine of proximity and

foreseeability to where it is just and reasonable for one to be held
liable even where the duty is owed.

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

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

It was held in the course of a normal conveyancing transaction, the

seller’s advocate did not owe the buyer a duty of care when answering
enquiries before contract because a buyer has a remedy against the
seller for misrepresentation. However, if the advocate took steps out
of his role as an advocate and accepts responsibility towards a third
party then he owed independent duty.
Pre-contract inquiries unlike searches (investigation of
title)
1. Touch on the physical stature of the property
2. Fetch information that would not ordinarily be available
through an official or personal search

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

It is upon investigation of title documents that requisitions are sent

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

Example:
b) Is the signature the proper signature of the executor?
c) If execution is by a company, ask for the mode of execution of
the company and a copy of the Memorandum and Articles of
Association. If a foreign company, and the MEMARTS are in a
different language ask for a legal opinion
d) Ask about the identity of the property
NOTE: There is no format for requisitions

An answer to a requisition just as in pre-contract enquiries if it turns

out to be inaccurate, the recipient will be entitled to rescind the
agreement, or if damage caused is not so substantial, he may proceed
with the agreement and seek remedies in damages.
Requisitions are also very important when you are acting
for lenders i.e. mortgagees or chargees having to exercise
the statutory power of sale. If there is a defect in the title
document, one can go to court and say the title was
defective therefore property cannot be sold.

Upon receipt of requisitions, an advocate should consult with his

client however, unlike pre-contract inquiries; one is under a duty to
advice his client. Do not give stereotype answers.

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

Execution and Attestation

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

The MEMARTS may dictate whether the seal alone is enough

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

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

NOTE: In exam, make sure both parties sign.

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

bound.

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

In the RLA, there is the requirement of verification under

s.110 which requires that the signatory to the document
appears before the registrar or before the person attesting
the signature.

NOTE: In view of LN No.146-153 of 2005, the LTA, GLA and

RTA requires the availability of one’s PIN No. ,
Identification documents (passport or ID) and passport size
photograph of the person signing. This in effect is to bring
in verification (impliedly). This was aimed at circumventing
the fraud at the Lands Registry.

Stamp Duty
This is basically a form of revenue collection by the Government by
selling either revenue stamps or the dye (red), the Government is
able to raise revenue. Stamp duty is provided for under the Stamp
Duty Act (Cap. 480)
Under s.5 of Cap 480, every instrument relating to property in Kenya,
if it is provided for that stamp duty be paid in the Schedule to that
Act, will be assessed and the required duty must be paid as a legal
requirement. See 1st Schedule to the Act for instruments in
conveyancing that will fetch stamp duty. S.6 of the Act says that duty
must be paid within 30 days of execution of the instrument or if
executed outside Kenya, within 30 days of receipt in Kenya. Failure to
pay duty means an offence has been committed. However, the
Government instead of exercising the Penal aspect of the Act will levy
a prescribed penalty. See: ss.26 & 113 SDA, S.20 also has penalty for
late payment

S.111 of RLA states that no document will be accepted for registration

unless the required duty has been properly paid. The amount payable
is dictated by the Minister of Finance and is usually stated in the
Budget. The duty is assessed on the instrument if it is a transfer on
the basis of the value of the property i.e. ad valorem duty
- Within municipalities and cities – 4% (urban land)
- Outside municipalities and cities – 2% (agricultural
land)

For leases it is based on the annual rent for which the

property is leased. Therefore you may need to present the
documents to the Office of the Director of Stamp Duty who assesses
the stamp duty payable i.e. the lease is examined for assessment.

Stamp duty is paid directly by way of Banker’s cheque to designated

Banks. You fill in a Stamp Duty Declaration Form.

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

The value relates to the property itself and not the fixtures and
fittings. Fixtures and fittings ought not be included. However, the
requirement that no property will be registered unless the value is
declared by the Chief Government Valuer has led to fixtures and
fittings being included.
S.95 & 96 of the Stamp Duty Act. On adjudication and exemption of
stamp duty where there is a restructuring of sister companies
therefore they only pay nominal duty
S.106 deals with exemption from payment of stamp duty by the
Minister of Lands

What is the purpose of the SDA if it stagnates conveyancing? This

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

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

Rates Clearance Certificates

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

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

etc when paid

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

One applies to the Town Clerk for Land Rates Clearance

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

Previously payment was made to the Commissioner of Lands but

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

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

The Commissioner of Lands Consent

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

Consent by the Local Land Control Board

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

Any transaction in respect of agricultural land must obtain the

consent of the LCB. This requirement is set out in s.6 of LCA. The
original purpose was to control the user and conveyancing of
agricultural land e.g. to avoid constant subdivision, avoid ownership
by foreigners or companies where the majority shareholding is by
foreigners.
NOTE: The LCA provides that even dealings with shares in a
company that owns agricultural land ought to be sanctioned by the
LCB
- In the case of a transaction where you are inheriting the property,
you don’t need to appear before the LCB

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

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

If consent is denied you could appeal to the provincial LCB. Final

right of appeal lies to the High Court where you can seek judicial
review

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

The Consent of the Kenya Railways

For any land adjacent to or adjoining the Railway land, the consent of
the Railways Corporation is required prior to any dealing in that land.
Cap 397 – Kenya Railways Corporation Act does not provide for the
above requirement.
Most of the time when one applies for this consent, one is required to
pay cess to the Corporation before being granted the consent. The
Deed Plan to most properties reveal a Railway Line running through
some parcels of land. This consent would be in addition to the LCB
consent if applicable.
The Consent of the Kenya Airports Authority
This consent is issued by airport owners for all properties which may
be adjoining flight paths. The whole purpose of this is for the
authority to find out what one wants to do with the property. One is
given a questionnaire to fill in. One must consult before doing
anything on the land.

The Consent of the Mortgagee or Chargee

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

The Consent of the Landlord [Lessor’s Consent]

This refers to one who has obtained leasehold from Government
(head lessor) and wants to sub lease it. This is found in sub-leases.
One will need the consent of the Landlord. Aimed at ensuring
agreements in the lease are honoured as well as all rent being paid.

The Consent of Trustees of National Parks

Properties adjoining or within parks require this consent prior to any
conveyancing transaction involving such land. The Kenya Wildlife
Service is the Trustee of such parks. This is to ensure there is no
derogation of title.

1. These consents are required to complete any given transaction.

In the absence of these consents the conveyance e.g. lease,
mortgage etc will not be registered
2. Condition 16 of the LSK provides that for purposes of
completion, all necessary consent must be obtained by the
vendor/lessor (he who is parting with the interest). In most
agreements in practice, the person obtaining the interest is
given a duty to assist in obtaining the consent especially where
both parties presence is required.
 3. If the consent is not availed or obtained one will be held to be in
breach. Unfortunately, the person who is aggrieved has
remedies in damages only. There is no room for specific
performance because as long as the consent is not given within
the specified period, the agreement lapses

See: Mucheru v Mucheru [2002] 2 EA 456

The CA held that if LCB consent is not obtained the transaction
becomes void even if the duty to obtain the consent was not exercised.
Facts: The respondent filed suit seeking an order to bury a deceased
husband on the property in the control of the appellant who was the
widow of the registered proprietor. The respondent claimed that her
deceased husband was entitled to a portion of that property under
Kikuyu customary law. The respondent proved trust under the
customary law and that the administrator was to obtain LCB consent.
The court held she was entitled to the portion subject to the LCB
consent.

The CA held that the establishment of a trust is a disposition of

property within the requirements of s.6 LCA and the LCB consent was
necessary. Having not been obtained within the required time i.e. 6
months, the whole disposition was void

Jacob Gichuki Minjire v AFC CA 61 of 1982

AFC sold Dagoretti/Riruta/1139 to the appellant at a public auction
where the appellant was the highest bidder. The appellant paid 255
deposit but no agreement was signed as per s.3 of LCA. AFC refused
to complete despite payment of the balance of the bid price within the
required 30 days. The appellant sued for specific performance but
AFC contended that the land was agricultural and a controlled parcel
leading to the auction being a controlled transaction as per s.6(2) of
the LCA and the sale was consequently void for all intents and
purposes as no LCB consent had been obtained or an application filed
within 6 months.
Held: No specific performance would be granted because:
a) Property had already been redeemed. Equity could not act
in vain
b) No LCB consent was obtained

Bosire J said:
“The lack of statutory consent at the expirty of the 3 months makes
the transaction void for all purposes until then there is only a de facto
agreement which has no legal effect”

See also: Kariuki v Kariuki (1983)

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

SALE AGREEMENTS
1. What is the position of the vendor and the purchaser?
It has been stated that the vendor becomes the trustee for the
purchaser between the time of execution and completion of the
sale agreements. Do statutes support the statement?
2. What sort of sale agreement is acceptable to my client? A simple
agreement or a complex one with damages etc
In the case of short/simple agreements, one leaves himself open
to implied provisions and the courts mercy. The complex
agreement covers more issues. There is no statutory
requirement for the format of a sale agreement.
One may opt for a hybrid agreement, not too simple and not too
complex depending on the circumstances. Do not include
irrelevancies.
3. The agreement must comply with any statutory requirements.
These include:
(a)The Law of Contract Act (s.3)
(b) Other statutes will vary depending on the
circumstances
4. A sale agreement is a contract and one must ensure that the
agreement is in tandem with all the Law of Contract principles
of:
- offer and acceptance
- intention to be bound
- consideration exchanging hands
- the contract is certain

Under the statute, there are three basic requirements that relate to
the form of the agreement: Cap 23 – Law of Contract Act (s.3)
 (i) The agreement for sale of land to be enforceable must be in
writing. This applies to all dispositions of interest in land.
(ii) The agreement must not only be signed by both parties but
the execution must be attested/ witnessed in the presence of
the person attesting. This requirement runs across e.g. for a
charge includes attestation of the facility letter.
Where do you sign?
Practice dictates that you sign at the end but since the
purpose of the execution is to authenticate the document it
can be anywhere as long as it is witnessed.
(iii) The terms of the agreement ought to be in one document –
s.3 seems to allow incorporation of terms by reference.
Although the reference is in the one document. In the UK,
there can be more than one document.

An agreement must at whatever cost be certain. If agreement is not

certain even if one complies with statutory provisions the agreement
will be void. See:
Muchira v Gesima Power Mills Ltd (2004) 2 EA 168
The COA held that any agreement that contains uncertain clauses is
void and specific performance or reliance on it for any remedy will
not be allowed.
Facts: The vendor sold land to the purchaser for 10 million. The
parties themselves drew the agreement. The execution was witnessed
by a qualified advocate. 10% deposit was to be paid on execution, 20%
later and balance within 90 days or when the title was produced in
the purchaser’s name. Possession was to be granted on completion or
when 20% was paid. Inter alia damages on default was 40% of 10
million. The purchaser alleged default and sued for 4 million.
Held: The CA held that the agreement was not enforceable even
though it had met all the statutory requirements. There was no
consensus ad idem as there was no clear provision as to when the
balance and possession would be given. The agreement was uncertain
and specific performance could not issue.

NOTE: Why didn’t the court get rid of the uncertain provisions?
It did not have a ‘saving clause’ in case of inconsistency

TERMS OF THE SALE AGREEMENT

S.3 (3) of the Law of Contract Act is silent as to the contents of a
contract.
S.55 of the ITPA lays out some of the basic terms of a sale which will
be implied to any sale agreement in the absence of an agreement to
the contrary. There is no equivalent section in the RLA save that s.38
gives the Minister in charge the power to lay out any implied and
general terms in consultation with the LSK. By virtue of s.38, the LSK
in 1972, 1982 and 1989 came up with Conditions of Sale which will
apply to any open contract.

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

Dharmashi v Abdulrahman (1950) 24 KLR 24

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

S.55 provides that the purchaser:

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

S.55 ITPA does not apply to RLA.

The sale agreement is ordinarily prepared by the Vendors advocate
because the vendor dictates the terms. See:
Salim v Okong’ o (1975) KLR – Duties of Vendor’s advocate

The vendor’s advocate then sends the draft to the purchaser ’s

advocate for perusal and confirmation of the terms in that sale
agreement
Prior to drafting one must have obtained all the details relating to the
parties from the vendor
Engrossment (reducing it into a formal legal document) before
registration

CONTENTS OF A SALE AGREEMENT

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

1) You must ensure you get the correct addresses for

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

You must also indicate the position on encumbrances i.e. the property
is sold free of encumbrances. If there is an encumbrance, you must
indicate who is to service the loan/discharge the encumbrance. You
must state that the purchase price will be used to offset the balance of
the encumbrance/loan. Avoid allowing the clause “sold subject
to all encumbrances…”

Ss. 2 and 3 RLA provide for sale of land plus that which is attached to
it. A fixture is something affixed to land by a human (not like a tree).
You must find out if property is being bought including the fixtures
and fittings i.e. they do not attract stamp duty. If you do not, the
vendor may argue that he is entitled to remove the fixtures and
fittings.
You could have a schedule listing out the fixtures and fittings being
bought indicate the value of the fittings. The transfer should have a
price less the value of fixtures and fittings.
Wake v Hall [1882] AC 195
Blackman J stated “the degree of annexation is what matters”

Ellitestone Ltd v Morris [1997] 1 WLR 687

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

Special Conditions
These are those conditions which apply sui generis to each
agreement. They are being extended to mean the variations of the
general conditions. For this reason it forms a separate part of an
agreement.
Examples
- where the contract price includes the value of the fixtures and
fittings sold separately
- where the fact is that the property is sold subject to a mortgage
- where the fact is that the sale agreement is conditional upon the
vendor receiving duly sealed letters of administration or
probate

In such cases you may have a clause titled special conditions.

A sale agreement (if the LSK conditions apply) will be completed

within 42 days of obtaining consent. This is a special condition which
varies the general conditions of sale.

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

MODEL SALE AGREEMENTS

Parties
If a company the description should have successors and assigns, if a
society it should be registered under the Societies Act, if personal it
should state personal representatives and assigns and it should state
the agreement is between X & Y

Definitions and Interpretations

Vendor and purchaser, singular and plural, definition of person to
include legal and artificial persons, headings etc

Incorporation of LSK Conditions for Sale

It is not mandatory to incorporate them. You could exclude some or
allow some or include all. You can also vary the LSK conditions and
you can add more details.
You must specifically state which LSK conditions to incorporate i.e.
1972, 1982, 1989
NOTE – there is a need to amend the LSK conditions especially in
light of new developments.

Agreement for Sale and interest sold

You incorporate the offer and acceptance i.e. vendor agrees to sell and
the purchaser agrees to buy.

Special conditions
Sui generis clauses
Variation of general conditions

Capacity
Legal competence for a person to sell e.g. if selling as an attorney,
administrator, agent, beneficial owner

Purchase price and Deposit

That is consideration that supports the contract. State it explicitly. If
by way of gift, it should be so stated. It must also state the
acknowledgment of receipt of the consideration.
Deposit is ordinarily 10% of the purchase price and ought to be paid
before or on execution of the contract.
For deposit state when it is to be paid, by who and to whom
Completion documents
That is the purchaser is to deliver the purchase price and the vendor
is to deliver the completion documents. The date of completion must
be stated i.e. time is of essence.
Provide for place of completion usually at the vendor’s advocates
office.
Where there is a financier, a professional undertaking is
given instead of the money/cheque
One also has to state vacant possession
Completion documents include title documents, Clearance and
Consent certificates, executed transfer, photos, consents, stamp duty
valuation forms

Assignment Clause
That is the transfer of the whole interest in the property. This is also
referred to as the conveyance clause in a sale agreement. Assignment
may be of the transfer or of the obligations and rights of the parties.

Default Clause
On omission or failure to perform a legal or statutory duty under the
contract. This clause addresses what happens in the event of breach
e.g. in case of default, a party will pay a specified liquidated amount
in damages

Non merger Clause

The clauses should be read as distinct and separate such that in the
event that one is null and void, it should be severed and will not affect
the others.
At completion it was deemed at common law that everything is closed
such that if there were any other agreements they would be closed i.e.
do not inherit obligations of the vendor at the completion of the sale
agreement. The agreement does not merge the sale agreement with
the conveyance itself. Read LSK condition 27

Stamp Duty and other related costs

This is based on the value of the property in question.
Registration charges are paid at the lands registry and are not pegged
on the value of the property. The advocates fees must also be catered
for and each party bears the cost of their own advocates, (if a
purchaser is obtaining advances from a financial institution, the costs
are borne by purchaser)

Search fees to confirm registration of the property in purchaser ’s

name.
LSK condition 30

NOTE: Stamp duty is usually paid by the person acquiring the

interest
Commissions should be given negative obligations i.e. the vendor
shall not be liable for any commissions whatsoever

Disclaimer
Provides for under the LSK Condition 14 clause 5. It embodies the
caveat emptor doctrine i.e. buyer beware.
It is the equivalent of an exclusion clause stating the vendor shall not
be called upon to point out irregularities in the property. (Q. Whose
interest is being protected? One needs to inspect the contract and
carry out pre-contract inquiries)

General
One needs to put any general obligations in this clause. One may put
saving clauses, how and when payment is to be made, whether the
amount would be net or gross. One may also include a clause on
whether the agreement, if it is to be varied, should be varied in
writing or any other way.

Intention to be bound
This is a conclusion to the agreement where the parties are of one
mind. It is just before the execution clause. It is the parties
affirmation to the contract especially in relation to the law of contract
act.

Execution
This is the affixation of one’s mark on the document. It may be by way
of signature, thumb print or a duly appointed attorney of a company
or by a common seal. The parties have to authenticate the document.
One must state the capacity in which the parties are executing the
document.
DEPOSITS
There is no general law requiring the payment of a deposit. One may
argue that a sale agreement is a contract and for it to be valid there
has to be consideration. However, a sale agreement is only executory
and does not require consideration.
However, over the years, parties have always paid a customary
deposit of 10%. Indeed the LSK condition of sale 10 states that the
deposit shall be 10% of the purchase price. However, one may have a
sale agreement providing that no deposit is required. A deposit is
however included by most conveyancers as a form of commitment
and to go round the illiteracy of most court registrars who will refuse
to record a caveat where there is no deposit.

Nature of the deposit

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

Who holds the deposit?

Usually, it is held by either an agent or a stakeholder. When the stake
holder holds the deposit, he holds that money to the order of both the
vendor as well as the purchaser. Even though it is the purchaser who
has paid it, it belongs to neither the vendor nor purchaser.
Therefore, if the vendor is unable to complete the money should be
returned to the purchaser in full without any deductions and with
possible interest. If the vendor completes, then the money is paid to
him. If the purchaser defaults, the money is paid to the vendor.
Qn: What happens if the stakeholder mishandles the deposit or
becomes insolvent?
NOTE: It becomes an issue of agency and the person who appointed
the stakeholder suffers the consequences:
- If vendor, he should complete as well as going after the
stakeholder
- If purchaser, he should pay another deposit

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

Universal Corporation v Five Ways Properties Ltd (1997) 1

All ER 254
When to return and forfeit the deposit

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

ER 370
The LSK Conditions of Sale (Conditions 3 & 4)

NOTE: The courts generally do not help. However refunds may be

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

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

COMPLETION AND TRANSFERS

After investigation of titles and execution of the sale agreement, the
next and final stage is the completion and transfer. The sale
agreement is merely executory and it gives no interest. It will only
give you an interest when you are able to complete as the purchaser
(specific performance) and vendor (forfeiture). S.54 of the ITPA and
s.3 of the RLA recognise that the Sale agreement is merely executory.

To get the interest one needs to register a transfer after paying the
requisite stamp duty. The purchaser needs to also pass some
consideration to the vendor. This process of exchanging of some
consideration is called COMPLETION. The vendor completes by
handing over possession while the purchaser completes by giving the
balance of the consideration. This is the final chain of conveyancing.
It is however bilateral, concessional and concurrent. Key phrases on
completion are:
1. The date of completion
2. The venue of completion
3. The deliverables (completion documents)
4. The obligations of either parties at completion

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

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

Read LSK Conditions of Sale 23 on Insurance.

See: Rayner v Preston [1881] Ch. 13

On relationship created in a sale agreement by vendor and purchaser

LSK Condition of Sale 23 – Insurance of property by vendor during

the sale agreement negotiations. If not insured by vendor and
property is damaged in the interim, purchaser has the option to
complete transaction and claim damages or to rescind the agreement
altogether.
If the property is insured, even if there is damage, the purchaser
cannot rescind, he must complete.
This is not a fair provision since it will operate against the purchaser ’s
interest if he wants to charge the property.

Date of Completion
When provided for in the sale agreement, it is just a target date for
completion BUT if it is provided in the agreement that the time for
completion is of the essence you must complete on the completion
date. If you are in breach, the innocent party may rescind it.

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

The phrase time is of essence may be implied in a sale agreement if

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

When time is not of essence, failure to complete on completion date

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

The notice must be valid and effective i.e.

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

Completion venue
Usually at the vendor’s offices or his advocate’s office. If the vendor
has mortgaged property, completion could be at the Mortgagee ’s or
his advocate’s office. This is where it is not provided in the contract.

At the venue at 2.30 BOTH parties must be ready to complete.

Purchaser delivers balance of purchase price and the vendor is
expected to give vacant possession. The deliverable in this case is the
key of the door to the property. Possession is de facto control where
you hand over to the purchaser i.e. the right to access the premises
and exercise full use and control over the premises

1. For purposes of conveyancing you need to ensure that the

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

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

The other deliverable is the requisite consent(s) e.g. LCB,

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

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

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

In practice however, the transaction is completed by one party

sending a deliverable on the undertaking that the other will give
delivery of his deliverables i.e. postal completion.

In postal completion, vendor’s lawyer becomes the purchaser’s

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

If the property is subject to a mortgage finance, the transfer will be

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

OTHER FORMS OF DISPOSITION OF PROPERTY

Purchaser from Developers

Auctions
They could be private or public. In private auction, only a limited
group of people are invited to buy the property

The bid given does not amount to a contract until it is accepted by the
knocking down of the hammer. S.3 of the Law of Contract Act does
not apply

The issue of bona fides applies i.e. seller under an obligation to fetch
the highest price possible
Ss. 12 & 11 of the Restrictive Trade Practices & Monopolies Act
prohibits bid rigging.

TRANSFERS
They are what gives the purchaser the right and interest
conveyed/purchased. The sale agreement of itself does not convey an
interest in land. See S.54 ITPA & s.3 RLA
Openda v Khan
Sale agreement creates no interest over the property

The transfer is always drawn by the plaintiff’s advocate save in very

exceptional circumstances e.g. in mortgages and subleases
Salim v Okongo [1976] KLR 42

LSK Condition 24 – Transfer can be drawn by the purchaser’s

advocate. The drafting responsibility is then in a way passed to the
vendor’s advocate when his approval is so sought. Purchaser ’s
advocate ensures the purchaser really obtains the interest in land
sold.

Forms of transfer
This depends on:
a) statute applicable
 b) interest to be transferred

For RLA land, forms are prescribed which are mandatory under s.108
and schedule 3 of the Act. You must use these forms unless you
prepare your own form, pay the requisite fee and obtain consent from
Registrar.

Under RTA, s.34 provides the form which is NOT mandatory and you
can adjust it mutates mutandis. It is in the form of a deed. It does not
matter that the interest is a leasehold or freehold, neither does it
matter that the person transferring is not the registered owner.

Under RLA if a leasehold prepare a transfer of lease – Form RL2

If freehold prepare a transfer of land-use RL 1

Under the GLA and LTA, these are simple deeds in the form
“conveyances or assignments”.

A conveyance refers to a document used to transfer an interest

registered under GLA or LTA which interest is a freehold.

An assignment refers to a document used for purposes of transferring

an interest registered under the GLA or LTA which is a leasehold
interest.

In drawing the deed of conveyance or transfer you can convey

different properties. Under the RLA the transfer of lease forms allow
one to transfer 1-5 and 6-10 properties respectively.

You may also include properties registered in RTA and RLA in one
deed as long as you obtain permission from the Registrar of Lands.
You ought to be careful with the use of precedents. Do not use them
blindly.

Under the GLA, one talks about;

a) A deed of conveyance – transfer of freehold
b) A deed of assignment – transfer of conveyance
c) An indenture of conveyance was common during
the regime of no requirement for registration. No
need to refer to indenture now.
Specimen Deed of Conveyance
See Handout
Commencement – Refers to the title of the deed itself.
Date – The execution date is the most appropriate to insert to the
document.
 Date stamp duty
 Ideally put the date of execution by the vendor i.e.
when the interest is conferred (practice)
 Ensure you get the right date to avoid conflict.

Parties – those interested in the transaction

 Get their names, descriptions and personal details right
 Their addresses also need to be correct as it is through this
address that any notice will be forwarded to them e.g. rates
demand, land rent demand
 The vendor’s address ought to be the same as the address in the
last purchase deed and perhaps even similar signature to curb
fraudulent transactions

Recitals – these are two-fold:

a) Narrative recital i.e. the recital of the title
b) Introductory recital i.e. the recital of the contract

It begins with the word WHEREAS.

The narrative recital sets out the vendors title. It makes it easily
understood for purposes of the conveyance. The introductory recital
explains the purpose or the intended operation of the deed of
conveyance/transfer.
It put into effect the agreement that the parties had.

Testatum – This where the deed begins:

“NOW THIS CONVEYANCE WITNESSESTH…”
It is a declaration that what follows in the body of the deed contains
details of the operation of the deed.

Consideration – This refers to the exchange given by the purchaser for

the interest in land that he is receiving. It could be monetary or
otherwise i.e. another parcel of land therefore a deed of exchange.
Consideration is important because:
 a) It is not a voluntary deed and as demanded by the law of
contract, one is suffering to part with something for what they
are receiving. Matters as between the Government and parties.
b) It avails:
 The remedy of specific performance
 It helps the government to determine how to charge
 Particular transactions by the parties i.e. stamp duty, income
tax

Receipt clause – this is necessary in the body of the deed or in the

transfer deed as it enables the purchaser and the purchasers
successors in title if any (heir, legal representatives) to avail
themselves of various statutory and legal provisions. It is an
acknowledgement by the vendor that he has received the
consideration (operates as a discharge for the purchase moneys). It
avails to the purchaser and its successors in title, the protection of a
bona fide purchaser for value without notice especially as against
third parties.

Operative words – these are words of the grant (transfer) and capacity
of the parties to issue that grant. It is the statement by the vendor of
what he is doing by virtue of the deed e.g. “the vendor as the
beneficial owner doth hereby grant and convey”
NOTE:
If transferring a:
a) Freehold GLA – convey and grant
b) Leasehold GLA – convey and assign
c) Freehold and leasehold RTA – Simply transfer
d) Charge document – Charge expressly
e) Lease - Issue a demise
f) Discharge GLA – Release and reconvey

Note: the capacity of parties really matters e.g.

- Beneficial owner
- Trustee
- Administrator
- Attorney
- This will show existence of power to transfer
the property
Parcels clause – Technical term denoting the description in words of
the property being transferred, conveyed or assigned. It should be
strictly accurate and includes sketchmaps, deed files etc. Includes
acreage of land. If the descriptions are too many you can describe
them in the schedule and make reference in the parcels clause. A
misdescription of the property can be corrected by variation. Avoid
misdescriptions because vendor can play dirty making your right of
rectification useless.

Habendum – maps out or defines the interest or the quantum of the

estate that is being taken by the purchaser. If it is a freehold being
transferred or conveyed, you should state that you are giving it to be
held in fee simple. If it is a leasehold, there are limitations state
expressly “to hold for a specific term e.g. 99 years, remainder of the
term”

If it is an assignment, state whether you are assigning the balance of

your leasehold tenure e.g. the residue of your time, fifty years less the
last 20 years etc (esp in GLA). Also put any limitations and
restrictions e.g. subject to easements, subject to payment of land rates

Covenants – A covenant is that agreement which not only binds the

vendor but also binds his predecessor. It details and declares all the
covenants of the parties.

Testimonium – This is the part that now links the execution or the
affirmation of the deed with the rest of the document “IN WITNESS
WHEREOF…”

Attestation/verification – the place where the parties sign or cause the

common seal to be embedded. It signifies the intention of the parties
that the deed ought to become operative and it is consequently so
deemed when the parties execute the document. Legal Notices No.146
– 153 of 2005 require that when you prepare a deed of assignment or
transfer, you attach photographs of the parties

Note: The schedule strictly and ideally speaking out to be inserted

between the testimonium and the execution clauses to avoid
fraudulent changes thereunder.

Under the RLA, the forms are very simple i.e.

 1. Commencement clause
2. Parties clause
3. Consideration/operative clause
Note: No parcels clause as this found in the commencement clause
If there are covenants, one has to seek permission to vary the form
from the Land Registrar.

OTHER DEEDS OF TRANSFER

a) Vesting Order – order by the court for the purpose of
conveyance. Does not exist under the RTA, GLA, RLA or LTA. It
is an order by the court for the purpose of
conveyancing/creating a legal estate and it operates to vest the
estate/interest in the same manner as if it had been a transfer
or a conveyance executed by the estate owner. Only in this case,
the vesting order is executed by a high court judge.
The Trustees Act Cap 167 grants this jurisdiction to the High
Court puisne judges (S.5-56 sets out the various instances when
a vesting order can be issued e.g. s.48 where the High Court has
ordered the sale of the property. Also applies where the court
sells the property in execution of a decree. Also where the court
orders specific performance. It is applied for by way of an
originating Motion or Summons.
The person acquiring that interest prepares a vesting order and
sends it to court for approval and execution by a High Court
judge. A vesting order is a transfer which is supposed to fetch
stamp duty. Also issued where the trustees are not acting e.g.
refusing to subdivide.

b) Transmissions
These are transfers save that the interest in land/lease from one
person to another is by an act of or operation of the law. This
will happen when:
 Somebody dies
 Somebody is declared bankrupt
The form that the transmission dictates is either an assent or a
basic transfer of interest in an estate by an administrator form.
Assent applies when dealing with the estate of a deceased
person where the land is registered under the GLA, LTA or
RTA. In the document, one’s title is only as far as one is an
administrator. RLA has a specific form for it.
 c) Sub-leases
These are transfers or conveyances in their own rights. A
sublease is basically a lease by a lessee to a third party
conveying some or all of the leased property for a shorter term
than that of the lessee himself. It is occasionally referred to as
an underlease or even a lease. In the latter case, it will happen
when dealing with freehold property e.g. 999 years lease and
given for 900 years. Subleases have been in existence in Kenya
since the late 1970s.

Characteristics of a Sublease
- The term to be granted in the sublease will depend on the
headlease i.e. must be less than the head lease.
- There is a management company that owns the property
(land) where the sublease is created. This company is
registered under the Companies Act Cap 486. Its purpose
includes inter alia:
(i) managing the estate where this sublease exists
(ii) acquiring the reversionary interest where the
subleases lie. It is the management company that
will then negotiate an extension of the lease.
- The owners of the sub-leases are entitled to a share of the
management company. Therefore, the sub-lessees own the
reversionary interest itself by getting a share certificate of
the management company.
- The reversionary interest will vest in the management
company.
- The building/architectural or site plans will be annexed to
the sub-lease, properly marked
- Insist that the sub-lease has a clause/covenant that upon
expiry of the term, the management company or whoever is
holding a reversionary interest will also give a similar term
automatically.

SUBLEASES & SECTIONAL PROPERTIES

1) They are dependant on the headlease
2) They depend on a management company
Under the sectional title, the format of the transfer takes the form of
prescribed instruments under RLA. Rationale: The substantive law
recognised in Kenya is RLA

The Sectional Properties Act was enacted in 1990 to facilitate transfer

of flats through mortgage finance. The lenders objected to subleases
as security because:-
d) The titles were dependent on the head lease by the Government
or Head Lessor. Therefore, there was some uncertainty as to
whether the lease would be extended, if someone defaulted and
the Bank had to sell, it would be hard to get a buyer and
extension wasn’t guaranteed.
e) Even where extension was guaranteed, the terms of extension
were unknown and uncertain therefore not good security
f) There was a distinct possibility that the head lessor would fail to
apply for extension of the lease
g) Also argued that subsistence of the sublease dependent on head
lessor serving his obligations.
Nevertheless, a grant was essentially the same as a lease, so this
argument did not hold much weight. The misconception was based on
looking at a sublease (not as title but) as a lease!

These arguments led to the adoption of the Australian condominium

legislation on subleases. The effects were:
1. The RLA became the substantive law and a sectional title could
be issued to an owner of a flat which was registered under the
Sectional Properties Act. If property not under RLA, you would
have to convert it to RLA. Flats owned under the Sectional
Properties Act have titles issued which are equivalent to grants.
They are issued to each owner of a unit.
2. Corporate bodies are also established under the Sectional
Properties Act similar to a company recognised under the
Companies Act BUT with no registration formalities. It is a
corporate body and has some liability. The moment a sectional
plan is registered corporate bodies are constituted. A sectional
plan is the document prepared by a qualified architect or
surveyor which defines or describes in a graphic form the units
constituting the sectional property. S.4 of the Sectional
Properties Act provides for the process of preparing a title
which commences with the registration of the plan. Upon such
registration the parcel of land register on which the property
 lies is closed and a separate register for each unit opened. The
corporate entity established upon registration is identified by
the name which name refers to the number of the sectional plan
e.g. Sectional Plan No.22

The main difference between subleases and sectional properties is

ownership of property.

Termination of the corporate body is unanimously by all the members

of the body or through the court (by members unanimously agreeing)

Distinctive features of Sectional Properties v Subleases

1) Operative law in sectional properties is RLA while in subleases
it could be RLA, RTA or GLA
2) Under the Sectional Properties Act the title is a certificate of
Sectional Title issued under RLA in other subleases, the title is
the lease itself
3) The corporate entity is registered automatically under s.17 of
the Sectional Properties Act, while in subleases, the corporate
entity is incorporated under the Companies Act as a limited
liability company.
4) The statutory framework regarding conveyancing in the
Sectional Properties Act is the same as those under the RLA as
well as the applicable legislation under Sectional Properties Act.
For subleases, the form will either take the general form under
RTA, GLA/LTA e.g. if GLA - assignment, if RTA – transfer
5) The generally accepted minimum term of subleases is 50 years.
In the case of sectional properties, the property will only be
converted to RLA from RTA, GLA or LTA if it is more than 45
years

Read Sectional Properties Act (Exam Qns)

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

1) An undertaking creates a legal obligation upon the advocate

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

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

It is a promise made by the advocate to do or refrain from doing

something. It does not matter what you promise to do or refrain from
doing you will be bound.
You must weigh whether the undertaking you give is within your
control and you will be willing to honour it.

There is no limitation, the undertaking could be oral or in writing and

it will still be binding and enforceable. However, it is important to put
them in written form so as to avoid misunderstandings on your part
and on the recipient’s part and for evidential purposes. Ensure that
you are aware of all undertakings sent out by members of your staff
because you would still be bound.

Undertakings given on email may be risky since they can be easily

amended and normally have disclaimers. Faxes are fine.

Always consider what you are undertaking.

KCB v Adala [1983] KLR 487

Undertaking in favour of a layman enforced – The undertaking was
not directed to an advocate but was enforced against the advocate.

Because the promise is given by an advocate he is personally bound

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

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

The purchaser’ s advocate should ascertain that he has not

only the balance of the purchase price but also other
disbursements like stamp duty and registration fees and
any other disbursements before giving an undertaking.

1. When you are acting for a redeemer bank (redeeming another

bank’s mortgage) you give them an undertaking that upon
registration of the discharge by the redeeming bank you will
give them the redemption funds. You can only give it after the
discharge has been signed.
2. If you are acting for a financial institution lending money to
anyone i.e. upon registration of the mortgage/charge you will
release the loan. You must state that this undertaking is solely
for the benefit of the client you state the name of the client so
that no one else can benefit from it.
Questions
1. Give four instances of undertakings.
2. On reforms, why do advocates deliberately fail to honour
undertakings?
Should undertakings be limited to advocates with 7 years in practice
since old advocates really respect them but young advocates do not
seem to respect them.

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

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

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

e) To obtain all the requisite consents if the same has not been availed
by the borrower e.g. consent to charge from the Commissioner of
Lands, L.A.’s consent
f) Duty to confirm that the borrower has obtained independent legal
advice i.e. its independent in the sense that the certificate is from
independent legal qualified advice. It is critical in a mortgage by
guarantee i.e. where the mortgagor is not the borrower, he is giving
his property as security for the lending to a third party. This is crucial
because:
1. Most mortgagors say that they did not get the benefit of the
loan/amount
2. Most mortgagors say that they did not know what they were doing.

g) Duty to get the lender to execute the charge or the mortgage

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

Duties of Lender’ s Advocate (continued)

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

To obtain all the requisite consents – This duty is ordinarily the

borrowers but where there is failure, the lender’s advocate must act.

Duty to confirm that the borrower has obtained independent legal

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

To cause the lender bank or its attorneys to execute the

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

To pay stamp duty on the charged document and lodge the same for
registration in Lands Registry as well as the Companies Registry
when applicable i.e. charge or mortgage being created by a limited
liability company. S.96 of the Companies Act indicates that unless a
notice of charge created by a registered limited company is lodged
within 42 days of its creation with the registrar of companies, the
charge will be void against the liquidator or any creditor of the
company. If the company goes into liquidation the chargee will be
ranked at the same level as unsecured creditors.

To complete the transaction by accounting not only to the borrowers

advocate but also to the client (lender) i.e. releasing the loan
proceeds cheque and refunding excess fees if any.

Responsibility of Borrower’s Advocate

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

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

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

Further mortgage
Same borrower and lender – GLA and LTA
Second charge/mortgage
There is a new party in the form of a second lender or financial
institution advancing additional finances. The second financial
institution requires the consent of the first lender.

Note: Second mortgages and further mortgages have been questioned

because the mortgage transfers the interest in the first place and
nothing is left save for reversionary interest.

Important covenants in a mortgage and a charge

At any given time, one should ensure their client has a good security –
one should therefore ensure the document complies with all the
statutory requirements e.g. statute of registration, law of contract act;
the document must be signed by both parties and the execution
aforesaid must be attested. The forms do not matter.

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

S.74 RLA dictate that the chargor/borrower must sign a certificate

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

Labelle International Ltd v Fidelity Commercial Bank

[2003] 2 EA 541
Ng’ eny v Kenya Commercial Finance Co. Ltd [2002] 1 KLR
295
Have held that the lack of that certificate will not fault the
chargee’s/mortgagee’s right to sell the property.

Labelle International Ltd v Fidelity Commercial Bank

[2003] 2 EA 541
A wife and husband guaranteed their company loan advances made
by the respondent bank. The borrower defaulted. The bank issued a
statutory notice and upon its expiry the bank moved to sell the
property charged to it by way of public auction. The borrower and the
chargors moved to court and contended that the charge gave no
statutory power of sale to the bank because the execution of the
charge had been witnessed by an advocate but the certificate under
s.69 had been signed by another advocate altogether.
Nyamu J held that lack of the certificate or even improper execution
of the charge document does not take away the statutory power of
sale granted by both the charge document and the statute to the bank.
This upheld the provisions of s.3(3) of the Law of Contract Act.

What are the crucial covenants in a mortgage/charge?

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

See:
Simiyu v Housing Finance Co. Ltd [2001] 2 EA 540
Ringera J held that where the plaintiff has shown a correct address
and has alleged that she was not served with the statutory notice, she
was entitled as a matter of course to an injunction restraining the
bank from selling the property for lack of a proper statutory notice.
NOTE: Where the lender is in possession of several addresses, the
best approach is to send the statutory notice to the last known
address.
2. The covenant to repay the amount advanced. This covenant should
encompass the principal amount advanced as well as any interests
accrued or charged. Also include the redemption date. This is
important because in the event of default on the part of the borrower
and the lender issues the statutory notice, sells security and there is a
shortfall, this covenant to repay will be the basis of suing for the
shortfall. Without this covenant, one cannot sue for the shortfall.
Without this covenant, one cannot sue for the shortfall.

Qn: When does time start running for purposes of limitation of

actions?
Ans: When there is default

The covenant is also an acknowledgement of the borrower’s

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

3. The covenant to keep the property in good repair and condition.

The essence of a mortgage/charge is security. If the property goes to
waste, it is of no use to the lender. There is need to ensure this
covenant has some efficacy. This is attained by the inclusion of e.g.
must be insured, right of chargee to enter and inspect, the chargor to
pay rent and rates, no alterations without the consent of the
chargee/mortgagee, no transfer or lease of the property and tha œ~the
property shouldn’t be given as securing for another loan to another
party.

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

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

Qn: What happens where amount is repaid, reconveyance executed

and owner fails to collect title from bank. Can you claim title after 12
years or is your equity of redemption no longer in existence?

REMEDIES FOR MORTGAGEES AND CHARGEES

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

A. STATUTORY POWER OF SALE

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

2. Under section 69 you can also exercise the remedy of selling

the property if the borrower defaults in paying interest for a
period of two months or more without giving the statutory
notice.
NOTE: Should you make a demand for the notice, it is deemed
a statutory notice and one must within three months.

3. It can also be exercised if the borrower is in breach of

a covenant in the mortgage deed or charge document. You
must however also give notice of breach and a chance to correct
the breach.

The sale under the ITPA is ordinarily by public auction. However, it

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

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

B. APPOINTMENT OF RECEIVERS
Under the ITPA receivers can only be appointed after the
statutory power of sale has arisen as they must have the power
to sell the property. The receiver is not the agent of the lender
even if appointed by the lender i.e. protects the interests of the
borrower.
C. FORECLOSURE
This is the right conferred upon the lender under the ITPA to
move to court and extinguish the equity of redemption.
Consequence – borrower/mortgagor ceases to have any interest
in the propery. It then matters not if good faith is not exercised.
The remedy of foreclosure is expressly established by s.80 of the
RLA. This is because in a mortgage some interest is conferred
whereas in a charge there is no interest transferred thus no
need to extinguish interest.

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

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

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

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

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

Definitions are also found in caselaw. See:

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

Exclusive possession means:

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

The premium/price for lease is not an absolute essential. This is why

s.3 RLA excludes it. Therefore an arrangement which grants exclusive
possession but does not provide for rent is still enforceable e.g. a
peppercorn

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

Parties
Must be certain.

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

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

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

The formalities of leases:

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

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

The covenants include:

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

In drawing these covenants, the conveyancer should not be

oppressive. He should ensure the interest of both parties is catered
for. In this regard, even though a covenant against sub-letting is
included in the lease, there is usually a rider that: “unless consent of
the lessor is obtained.”

In the case of commercial properties, the leases will always be very

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

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

Duties when acting for the Lessor/Landlord

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

Duties when acting for Lessee/Tenant

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

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

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

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

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

5. By way of a merger
i.e. a merger between the leasehold interest and the
reversionary interest. The merger of this two interests must
however be with the same person.
-----

REMEDIES IN CONVEYANCING
As an advocate your advice is not limited to theoretical solutions i.e.
statutory provisions. One must pick on a relevant/correct remedy in
practice. Every case must be considered on its own facts. The
remedies in conveyancing are four-fold i.e.
1. Statutory remedies
2. Equitable remedies
3. Common law remedies
4. Quasi remedies e.g. cautions, caveats, inhibitions, prohibitions

Common Law Remedies

1. Damages
2. Rescission

Damages
The issue is to ensure that the damages to be awarded are given as if
the contract had been performed. Value the property depending on
the loss of bargain. The compensation is and must be intended to put
the aggrieved party in a position equivalent to that which would have
existed if the contract had been performed e.g. if the contract is
performed and vacant possession is not given, damages will be
limited to the time you did not have vacant possession until when you
get it.
Since these are common law remedies, you must mitigate your losses
and not just wait for court to determine. If the transaction is not
completed advice your client that the party in breach must
compensate you. However, you must demonstrate that you were also
ready and able to complete i.e. both of you have to be in a position to
complete.
If the above can be shown, when does the court assess the amount
due to you?
NOTE: the assessment is done on the day you go to court and the
court will award interest to cover the wasted years. Ringera J has
however held that assessment must be as at the day of judgment.

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

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

Since specific performance is an equitable remedy, all the maxims of

equity will apply e.g. equity will not act in vain e.g. if property has
been sold or let; he who seeks equity must come with clean hands i.e.
you must not be in breach

A court of equity will not abuse equity i.e. act to affect another party
entitled to an equitable remedy i.e. with competing interests. The
court will weigh the two interests and will not abuse that other equity.
Read:
Bullen & Leake on Specific Performance

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

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

CAUTIONS AND CAVEATS (QUASI-REMEDIES)

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

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

Cautions belong to the RLA regime. It is a requisition to the registrar

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

Consequently, it is important that when you lodge a caution, you

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

A licensee can also lodge a caution. This is a way of protecting

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

Thus, a caution can be very easily removed. It is often abused by the

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

Inhibitions and prohibitions are also same as caveats and cautions

but are issued by the court i.e. a court order stopping any dealings in
land for a particular period of time or until another order is made.
Inhibitions – RLA s.128
Prohibitions – GLA, RTA, LTA
The object is to protect registered interest from being defeated.

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

Interests to look at are the shareholders of the management

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

A developer will develop the flats using the buyer/tenant’s money

therefore one has to look at the contractual terms in relation to
construction, completion date, whether it is feasible, whether other
construction work needs to be done or whether it is logistical.

Occupational certificates from the local authorities are crucial. They

certify that the development is proper within the jurisdiction of the
local authority and are in accordance with the plans that were
presented to them.

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

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

How is the level of progression audited especially where the developer

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

One also needs to check how much your client will pay upon the
transfer of the reversionary interest. That figure should be known
before the signing of the agreement because if left out it can be hefty.
It is usually between 10,000 and 50,000.
The sale agreement also provides for some extra charges. However,
there is no rule that states that the buyer should pay the vendor’s
advocates fees. If your client is going to pay, then it should be
established early in advance. (However, nowadays when it comes to
buying of apartments there might be such a requirement in respect
of the fact that the vendor’s advocates will also handle the formation
of the management company and fee in respect of the same to the
purchaser.) Other charges are electricity deposit, water deposit etc
(these amounts need to be the statutory amount), six months service
charge (security, caretakers fees, maintenance of car park, swimming
pool, playground and gym etc) The service charge ought to be audited
by the management committee.

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

(2) Purchasing under Sectional Properties Act

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

Distinction between sectional titles and sub-leases is:

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

(3) Sale of Land

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

(4) Purchase of land by way of shares in a Co-operative Society that

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

(5) Purchase of Commercial Property for Development Purposes

Check for change of user and subdivision of the land. Change of user
is where the purpose of the property is converted to another purpose
e.g. Mombasa road it was for industrial use but now is being
converted to residential use.

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

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

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

Requirements under Cap 23 as to execution of contracts by both

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

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

to demonstrate good faith

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

usually standard terms of contract

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

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

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

Obligations of an advocate in this transaction include carrying out a

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

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

Where the sale is by any other financial institution the proper

procedures must be followed as per the relevant statutes.

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

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

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

The Auctioneer must have a valid practicing certificate for that year
because failure to hold such may render the sale void.
SALE AND PURCHASE OF LAND
Steps Commonly Taken By Seller’s Advocate
1. Take instructions from Seller
- Take Seller’s instructions including details of proposed, of
related purchase, authorization to disclose details in chain
transaction, replies to pre-contract inquiries etc
- Check conflict of interest issue
- Discuss fees, disbursements, taxation matters and
confirm instructions
- Check and confirm that proceeds will clear any
encumbrances
2. Draft initial letters
To agents, to client, to Buyer’s Advocate etc
3. Obtain title deeds from Seller and other documents necessary
for purposes of sale which are available immediately. If
property is leasehold address following issues:
- Is consent required? From who?
- What are the outstanding outgoings?
- Will the freehold or leasehold be deduced?
4. Draft and reconfirm with Seller’s answers to pre-contract
inquiries
5. Draft the Contract and dispatch to Buyer’s Lawyer with copy to
Seller for approval. Send also to Buyer’s advocate
- copy or abstract of the Title
- reply to pre-contract inquiries
- copies of relevant planning consents, covenants,
easements, licenses, insurance certificates etc
6. Engross the Contract (Sale Agreement) on receipt from Buyer.
If amendments proposed then consult with Seller before
engrossing.
7. Return Contract to Buyer for execution or signature.
8. Receipt and deposit in the client account any deposit payable
9. Confirm deposit cheque has been honoured and ask Seller to
execute Contract
10. Return counterpart copy of the Contract to Buyer’s
Advocate
11. Advise Seller that he had a continuing duty of care towards the
property and should take reasonable care to ensure that the
property remains in the state in which it was at the date of the
Contract
 12.Reply to any requisitions on title. Attend to specific queries or
objections raised by Buyer
13.Peruse and approve the Draft conveyance and return the
approved or revised Conveyance
14.Prepare for redemption of any Mortgage(s). Contact Mortgagee
and send Discharge with undertaking
15. Prepare a Completion Statement. Purchase price less deposit
paid add apportionments (and interest)
16.Arrange for execution of conveyance
17.Arrange for and host completion meeting
18. Report completion to Seller and Estate Agent and
authorize release of keys to Buyer
19.Redeem Mortgage(s). Comply with and satisfy undertakings
and obtain release from undertakings
20. Account to client for proceeds of sale. Full purchase price less
Mortgage redemption less commissions to Estate Agent add
apportionment (and interest?) less Advocates fees. Pay net to
Seller

Steps Commonly Taken By Buyer’s Advocate

1. Take instructions from Buyer
2. Consider conflict of interest
3. Discuss and agree on fees
4. Receive and deposit the deposit in the client account
5. Liaise with Buyer as to his financial arrangements and send a
letter to Buyer on desirability of having a survey and/or
physical inspection of property and determine appropriate
completion period
6. Advise Buyer on taxation matters i.e. capital gains tax, VAT and
stamp duty implications on the transaction
7. Consider Surveyor’s or Valuer’s Report
8. Deal with planning matters
9. Make pre-contract searches and enquiries
10. Consider the draft Contract and raise pre-contract
enquiries of the Seller
11. Investigate Title and raise requisitions
12.Consider Seller’s replies to pre-contract enquiries and
requisition. Consult on the same with Buyer
13.Amend draft Contract as necessary and return to Seller
 14.Make preparations for the Mortgage facility if Lender is
separately represented and advise Buyer on terms of Mortgage
15.Engross or receive engrossment of Contract
16.Arrange for execution of Contract
17.Return engrossed and executed Contract together with deposit
cheque to Seller’s Advocate
18. Receive counterpart Contract signed by Seller
19.Draft Conveyance and send for approval and upon its return
engross the same
20. Make pre-completion searches
21.Make further preparations for grant of Mortgage and ensure
this is in place
22. Arrange for execution by Buyer of
- Mortgage
- Conveyance and attestation of both
23. Receive all monies (disbursements, fees, balance of
purchase price and apportionments)
24. Attend completion and report to client
25. Stamp conveyance and Mortgage
26. Give notice to tenants
27. Simultaneously with 26, lodge Conveyance for
Registration
28. Make post completion searches
29. Account to client and release title documents to client
30. Dispose of any other documents as instructed.

MODEL SALE AGREEMENT CLAUSES

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