For purposes of this discussion, we shall restrict the meaning of property to vacant land and or developments on land like an apartment or block of apartments, townhouses or bungalows.
Purchasing property is likely one of the most significant financial purchases that one will ever make; and in so doing, it is most certainly important to involve a competent lawyer in the process to ensure that your interests are well protected; due to the complexities that come with the process itself and also as a result of the rise in fraud cases relating to land.
Hiring a lawyer may seem like just another added cost, but ultimately, it could save you hundreds or even thousands of dollars in the long run by preventing problems before they arise. With each step of the process, the risks involved are carefully highlighted.
The process of buying a property can be divided into three stages; that is: –
- Pre-contractual stage or negotiation stage
- Contractual stage
- Transfer of land stage
- Pre-contractual stage or negotiation stage
During this stage, the chief role of a lawyer would be to assist you in negotiating the purchase price of the desired property by engaging a land valuer to ensure that the price quoted by the seller is commensurate to the market value and is not exaggerated, and conducting due diligence on the property and the seller and shall include: –
- Conducting a land site visit to identify the physical location of the land and acquire information from the owners of the adjoining land on whether there has been a dispute over the land and such other information that may not be acquired from the relevant government offices but may have adverse effects on the transaction.
- Retaining the services of a land surveyor to ensure that the size of the land is exactly what is stated in the title deed.
- Obtaining copies of the identification documents of the seller and copies of the ownership documents of the land
- Undertake due diligence on the identification documents of the seller to alleviate the possibility of impersonation or use of fake documentations.
- Conduct an official search over the subject property at the relevant land registry to confirm that the property is indeed in the name of the purported seller and there is no antagonistic interests on the land.
- Obtaining a survey map relating to the property to confirm the boundaries of the desired land and to also ensure that it is not on a road reserve, riparian land or any other public utility.
- Contractual Stage: –
Once a lawyer has concluded on all the relevant due diligence on the property and the seller; the next step will be to enter into a contractual agreement on the sale of the land.
The agreement will essentially crystallize the negotiated terms into writing for sake of protecting the interests of both the seller and the buyer; and shall among others state the purchase price, the deposit to be paid, the mode of payment of the balance, the duration it should take for the transfer to be registered in favour of the buyer, the obligations of both parties, how a dispute is to be resolved in case one arises and such other things which your lawyer may consider it fit to be there to secure your interests.
It is important that the agreed deposit of the purchase price be paid out to the lawyer of the seller for onward transmission to the seller and the balance of the purchase price be left with the buyer’s lawyer so as to ensure that he can issue a professional undertaking (a promise) to the seller’s lawyer to release the original ownership documents of the land for purposes of registering a transfer of land.
- Transfer of land stage: –
Upon receipt of all the original ownership documents to the land and other relevant documents, the lawyer for the buyer will proceed to prepare the appropriate transfer documents and ensure that they are signed and witnessed by the lawyer for the seller and the buyer himself.
The transfer of land process will from then on be done by the lawyer for the buyer.
The property in this stage is required to be valued by a government valuer for purposes of computating stamp duty payable on the transaction and the rates payable will depend on the location of the property.
The buyer is obligated to pay the assessed stamp duty costs; and therefore, it is important that the buyer is informed by the lawyer at the earliest time possible of their liability to make this payment.
Immediately after payment of stamp duty the transfer forms and the completion documents together with the original title deed are taken to the relevant land registry for registration to commence, where a new title is issued with the buyer’s name.
At the first stage, a search was done to ensure that the seller is indeed the true owner of the property but now this second search is to ensure that the ownership has been transferred and the title of the property reads the name of the buyer. This means that the transfer has been successfully completed.
The buyer’s lawyer then releases the seller’s lawyer from the professional undertaking mentioned above and this allows the seller’s advocate to release the balance of the deposit to the seller.
Conclusion
In conclusion, it is clearly evident that buying and selling of property is a critical process with high risks which can be identified and mitigated and or eliminated by retaining the services of an experienced lawyer.
Besides the above, due to lack of information or awareness by buyers and sellers who are not represented by advocates, they highly likely to make errors which sometimes becomes too costly.
Princess Caroline N Mutisya
The write is an Advocate of the High Court of Kenya and East Africa; the Managing Partner at CR Advocates LLP.
Email: carole@cradocaesllp.com