CONVEYANCING LAW AND PRACTICE Lecture 1 10th May 2006

Introduction
Conveyancing is the process by which legal title to property is transferred. A Conveyance
is the document used in transferring legal title to property.

The emphasis is on the process of transfer of legal title in property. What you transfer is
the legal title.
Does the vendor have legal title over the property?

In the Ndungu Report we had people who acquired properties illegally or from people
without proper title.

Conveyance
It is simply a written document. A court order confirmation of grant and an
accompanying asset (succession). Land held in trust a vesting order made by the court.
Therefore conveyancing means more than just basic transfer of property.

Joint ownerships and tenancy where there is surrender and if one of the joint tenants
dies this is seen as modification of interest.

Lecturers definition of conveyancing

Conveyancing is the art or science of effecting the transfer or property or modifying
interest in relation to property by means of written document or any other document.

Conveyancing transcends all other branches of the law e.g. land law contract law, equity
e.t.c.
Conveyancing starts at the law of obligations (contracts)
Land law will define interests and legal title thats being transferred and ultimately
effected. Equity deals with the remedies e.g. specific performance and injunctions.

History of Conveyancing
Originated from English Law. in 1051 A.D. conveyancing was effected by means of a
feoffment. Feoffment is a document noting that one particular lord was transferring his
interest in land to another lord. This would be regarded by the Lord of Manor as
evidence of a feoffment. This was never complete until a public ceremony known as the
delivery of seisine in the presence of all the lords followed by delivery of the physical
possession e.g. by way of a taft of grass being transmitted. Lord of Manor witnesses the
ceremony completing the process.

In 1535
A statute was enacted called the statute of uses. The statute was to forestall what the
crown and lords deemed to be loss of their earnings. Communities would perhaps till
the land be independent of the crown. It introduced the phrase Unto and to the use
of.. the term the use of would not be the transferr but still the transferor. There still
wasnt any registration and delivery of possession was no loner mandatory.
The Lord of Manor still kept the modified feoffment. After the Norman Conquest leases
came up as peasants arranged to transfer to 3rd parties and for their own use and
advantage.
In order to circumvent this, 1536 statue of Enrolments was enacted. This was the first
time leases and land transfers were recorded by the state. If a conveyance was
unfavourable to the state the state would decline it or register it.

In 1677
There was the statute of frauds
This demanded that the feoffment (Deed in this statute) had to be made under seal and
made under 3 witnesses for attestation. Only independent people were at that time
allowed to testify in court save for the royal family ( Even they were limited to say the
word yes to a read statement.

1677 1925
Real Property Act, 1845
Land Transfer Act, 1875 ( amended in 1897)
Vendor and Purchasers Act, 1874
Registration was not strict.
Up to turn of the 20th century it was easy to know who owned what property.

1925
Law of Property Act
It was at this time that folios were introduced.
Simplification of conveyancing was necessary
Surrenders, releases, partitions and various interests.
The concept of conveyancing in land came with the advent of colonialism.

Registration of Documents Act, 1901 [Cap 285]

Provided for the registration of deeds conferring only interests in property. There was
only one registry. The documents under the RDA did nor prove tile only possession did.

Land Titles Act, 1908

Provided of registration of deeds and documents.
Originally applied to coastal land. An absentee owner losing his land was curbed under
this Act because the recorder of titles was created.
The recorder adjudicated disputes and on satisfaction that land belonged to a particular
party he granted a certificate to that person. There still wasnt any property way of
registration of title.

Government Land Act, 1915

For the first time, deed plans scientifically created by surveyors were introduced for the
first time. It provided that any conveyance of an interest in land had to be by deed under
seal.
Identification of land was easier but the interest in land was undefined.
An amendment was occasioned and the fee simple was introduced.
In England a lease was for only 1 year (renewable)
In Kenya a lease term was 999 years.

Registration of Titles Act, 1920

Registration of title was introduced at this time.
The crown/state was guaranteeing ownership of land
Registration of Lands Act, 1963
Introduced title deeds and a register showing who owns it, sections, encumbrances. This
heavily borrows from the English Land Property Act.
It prescribes very simple forms for registration of and transfer of land.
Section 108
Gives the requirement of these simple forms

What is the future of conveyancing in Kenya?

Why the need for formalities in Conveyancing?

1. Documentation
Any disposition must be in writing

2. Verification
3. Attestation
4. the conveyance/deed

Section 3 of the Contract Act states that any disposition of any interest in land can
only be enforced when the same is reduced to a written document, signed by all parties
and signature of all parties attested by a witness when that contract is signed (Save for
where a party is exercising his rights between the mortgage or chargee.

Amendment of 2002 provides as follows; All contracts or dispositions must be signed by

both parties, witnesses and attested.

No suit shall be brought concerning a disposition of land where the document is null
and void. Before 1st June 2003, one could create an interest even by way of
correspondence (Activated by operation of law)

1990 Amendment
The AG took 12 years to bring into effect this amendment.

In the case of Southern Credit Bank Corporation (HCCC 189 of 2004),

In December 2002 the plaintiff agreed and allowed the defendant to overdraw its
account to the tune of Kshs. 18M. The Defendant naturally defaulted but in the
meantime surrendered title deeds registered under the RTA to the plaintiff.
Accompanying the documents was a letter signed by two directors of the defendant
stating the plaintiff could charge documents and the defendant refused to sign. The
plaintiff sued for specific performance.
HELD; [Maraga J.,]
The suit was an abuse of process as the agreement was not contained in a document
and signed as provided by the law of contract Act.

This case was subject to appeal

The Evidence Act

There are some agreements that must be in writing.

RLA and RDA

Impliedly and formally require conveyances to be in writing.
What is the function of formalities?

Next class

LECTURE 2

Formalities in Conveyancing

1. Writing
This was made necessary through the statute of frauds

2. Registration
Through the statute of enrolments

Purpose of formalities
Writing
1. Forensic Function
To avert and avoid fraudulent transactions in property (land)
It would be difficult to do so in the absence of writing.
Formalities help to provide the simple and conclusive evidence that there was an
agreement

2. Evidentiary Function
Formalities (especially writing under the Contract Act) helps to bring in precision on
the legal interest being conveyed.

3. Protective Function
To protect persons who were joint owners who werent able to make well informed
decisions especially between husband and wife.
Formalities create specific obligations thereby helping the partiies to re-think their
decisions over land transactions.

How to circumvent these requirements

a) Restitution in equity
b) Promissory estoppel

Registration
No right will be conveyed if the conveyance is not registered. What referred to here is
the document.
Registration is the keeping of records of land dealings in the land registry.

Purpose
1. Ease of dealings
By registration the dealing are made much easier.

2. Governance
This helps the government to keep track of the user of any particular land parcel.
Government also tracks tax evaders much more easily.
 3. Certainty
Registration creates certainty and therefore security of title

4. Rectification
This is an extension of registration thereby actualizing the forensic function of use of
formalities.

5. Security of Tenure
Upon registration any transferor, registered proprietor, have security of tenure over
their interest over the land

6. Indemnity
An independent right to indemnity from the government where there is fraud or an
error in the registry.
Section 23-24 RTA
The Tajmal Apartment Case, Tajmal Apartments located in Kileleshwa.
RLA section 144 147

Where are the registries located?

RTA they are located in Nairobi and Mombasa

RLA are district registries

What is the function of a land registry?

1. Record all dealings in land
2. Give notice of dealings in land e.g. though searches
Deed file
Correspondence file
3. Records all the maps
4. Records all the planning policies
Under the Ministry of Lands
Act No. 61 of 2005 states that land under 2 acres should not be sub divided.

Always remember never to take the search of your adversary.

How are registries created?

1. RLA Registries
Section 5 of the Act provides for this and states that the Minister of Lands decides
how and when to create a registry.

Who is the head of a registry?

The head of the registry is the Chief Lands Registrar (engaged by the PSC)

2. RTA Registries
Section 4 creates District Registries
Although only 2 exist currently that is Mombasa and Nairobi (Inland Registry)

Who heads the registry?

The commissioner of lands is the ex officio registrar general.
Has the right registrar executed your conveyance?

3. GLA Registries
GLA Registries are created by statute. There is only one GLA Registry.

Who heads this registry?

The commissioner of lands who has the power to create registries as he/she deems
fit
Principal lands registrar

4. RDA
Modestly used. It is used for agreements, power of attorney e.t.c.

How is registrations effected?

1. Deed
A deed, documents or any entry of particulars of an instrument into record

RLA has specific registers for specific transactions [folios]

RTA its the document itself that is registered
The lecturer stated that the RTA register is strictly not a register because its the
document itself that is used as a register in the deed file.

RLA formally created a register

This is divided into 3 section
a) The property section
b) Proprietorship section
c) Encumbrance section

Every single parcel has its own register/folio

a) Property Section
Gives the title NBI/Block I/292
It also gives the index map
b) Proprietorship section
Contains the name of owner and his/her address.
Also includes any inhibition on the property e.g. minors interest, trusteeship, caveats
and cautions.

c) Encumbrance section
Any charge or encumbrance adversely affecting the land/lease
The certificate is of itself not a register
The registrars not obliged to make entries on the certificate.
Entries are made in the register
The original is kept in the parcel file (Unlike GLA, RTA where kept in a deed file)

Allodium

Fee simple
 Leasehold

Easements and Encumbrances

RTA
Any initial conferment of an interest in land must be registered.
Cujus maxim
Doctrine of annexation
Quic quid plantatus maxim
Fixtures belong to the land

Allodium
Property that is free and clear of all encumbrances including liens, mortgages and tax
obligation
Such cannot be taken away by law for any reason whatsoever
The absolute estate
Some very rare estates exist in the USA, New Zealand, the Vatican.

LECTURE 3

Doctrine of annexation
Buildings are a permanent fixture, a tree historically was permanent fixtures but this isnt
the case today.
When drawing up agreements, its prudent to add fixtures and one must not assume
they are part and parcel of the agreement

Allodium
Allodium describes the situation of a real property which is owned free and clear from
any encumbrances including liens, mortgages and tax obligations.

Such title to land cannot be taken away by any operation of the law by any reason
whatsoever, it is absolute. It is rare to find such titles nowadays; they are there in the U.S.
and New Zealand. In the Vatican the ecclesiastical properties used for religious purposes
are unlikely to be subject to any tax or to be taken away.

The Patriot Act of US it extinguished the allodium right.

The RICO Act , the provisions in this Act provides an allodium being forfeited to the state

Fee Simple
This falls short of an allodial title. It assumes absolute ownership of the property with
unlimited use and non restrictions on transfers.
This is the highest interest in title one can acquire in Kenya it is there in the RTA and RLA
it is recognized by the substantive laws of ITPA and RLA.
It is subject to The Rating Act which governs payment of rates.
You can own it for as long as you live and as long as anybody can inherit the same, as
long as you have descendants, the fee simple survivors. When the possible heirs cease to
exist there will be no owner and the doctrine of bona vacancia will apply and will revert
to the state.

Lease hold
Unlike fee simple which is a primary interest, the leasehold can safely be stated as the
secondary interest. The leasehold derives from the primary interest of the fee simple
here the interest in land is held for a specific term.
There can exist a sub lease.
There is a premium you pay for it, it could be monthly, every year or every century. There
is the specific term and exclusive possession. This can be used to distinguish a lease
from licence

Servitudes and Encumbrances

This is double ages. It consists of an interest burdening an owner of a parcel of land and
favouring the holder of that encumbrance. Example legal mortgages and legal charges. It
limits your dealing with the parcel of land.

This can be found in the statutes; a caution will be registered section 131 of RLA, and a
caveat under RTA section 57.
They entail dealing or transfer of the whole or part of the land
Under encumbrances, there is an inhibition which you find under the RLA and is usually
a court order which inhibits dealing of land for a particular time till the occurrence of an
event. This recognizes an interest of the party and limits the rights of a registered owner
of a parcel of land.

Prohibitions
This also originates from the court in favour of a decree holder, a judgment creditor, you
apply for this when you wan to execute monetary decree and the prohibition will be
registered.

Restrictions
Under RLA and RTA and these are always imposed and registered by land registrars to
prevent improper dealing or fraudulent dealing vis a vis any parcel of land. This can be
done at the instance of any party; this can be down by writing to the registrar or by the
registrar on his own motion. The registrar may place a restriction. As a practitioner,
lender and banks advance monies but encumbrance has been created, there are 2
avenues to advice either a caveat or restriction.
The registered owner cannot transfer the land.

Servitudes
Registrable through a conveyance. These are rights that one acquires over anothers
land.
Examples include easements, profits and restrictive covenants or agreements.

Easements
It is an arrangement that allows an owner to use the adjoining land for the benefit of his
land. It is a right attached to or annexed to a land entitling an owner of a parcel of land
to do something on land that doesnt belong to him, or prevents the owner from doing
something that may adversely affect an adjoining land. Therefore it could either be
positive or negative.
It doesnt vest any proprietary or possessory right. The parcels of land must be adjoining.
It is created by a deed of conveyance. Section 94 RLA. All parcels of land registered
under RTA

Profits a Prendre
Allow you to take something off any persons land but not exclusively. A laicence will give
exclusive right but in profit which are recognized under section96 RLA and ITPA, you can
be allowed to take something off someones land

Restrictive Covenants/Agreements
Consist of agreements between 2 land owners where one land owner promises the other
not to do certain things on the land. It limits the uses of the land, in this case the
promise is to the benefit of the land and not to the individual. The promise is in rem and
not in persona.
The restrictive covenant binds even a 3 rd party while easements are personal. You find
limits to constructions; have a covenant not to build apartments on a piece of land.

What about covenants not to sue?

Where you transfer land with a promise not to sue, this operates against public policy
and one can be entitled to sue. In conveyancing when you conduct a search and find
there is a restrictive covenant always look at the document itself, if the document isnt
registered it wouldnt bind a 3rd party but the first party.

There are covenants entered into where covenant is against competition. This border
against restriction in trade, but in land law once registered it must survive

There are also spite covenants where you buy a parcel that doesnt adjoining it but
another and the only way to access it is through anothers piece of land your piece of
land, for as long as land is being transferred there will be no easement to access the
land. This a covenant out of spite.

Always look at the effects of restrictive covenants.

Injunctive remedy through the courts of equity

Any restrictive covenants must be strictly construed.

Under RTA and GLA, LTA you can draw any format of the deed but others are actually
prescribed for. If not clear you prepare one under section 108 RLA and present it to chief
registrar.

Section 30 RLA- overriding interests

Transactions that must be registered

Our statutes state before any interest is passed; there are certain transactions that must
be registered therefore under section 57 and 59 of LTA all documents affecting any
holding or interest in land must be registered for the interest to pass. One exception is
the advocates lien, as an advocate if the property is registered under LTA and your fees
havent been paid you claims without having registered it.

Under section 95 of GLA any grant by the government or lease granted by government
or even licence by the government for the interest created by such to pass.

Section 100 GLA also dictates that unless such documents which pass interest are
registered you cant be allowed to tender the same as evidence in court
Section 99 GLA demands that all transactions affecting conferring limiting or
extinguishing rights titles or interest in any property registered in GLA except for leases
for one year or less must be registered

In RTA all documents which effect a disposition of land must be registered in accordance
with the act, section 20 RTA, if not the document is void.
Under GLA the document isnt void but you cant use it as evidence.
There is a time limit under RLA, you must register documents otherwise there is a
penalty.

Under RTA the documents that require registration transfers and easements section 34,
leases any lease for more than one year must be registered for an interest to pass and
legal charges under section 46 must be registered.

Under RLA section 38 also requires that all dispositions of land lease or charge it must
be registered. For leases the period must be for 2 years or more.

Effect of registration
Registration of a title or any person who is a proprietor of land both of RTA or RLA,
extinguish the communal system as it vests in the registered proprietor and you become
and absolute owner of the land or lease or charge together with all right and privileges
thereto. It is absolute proprietorship being created.

Under RTA a first registration is indefeasible notwithstanding any fraud or mistake. Any
forged conveyance or transfer will lead to an indefeasible title. And no rectification,
cancellation or amendment can be effected by the court. This is only in regard to first
registration. In subsequent registration can still be protected unless one isnt aware of
any fraud.

Section 23 read with section 24 of RTA gives an absolute and indefeasible right to a
title but subject to challenge on ground of fraud or misrepresentation.
Unlike RLA, RTA talks of indefeasible title and state that any document is conclusive
evidence so long as you are dealing with property under RTA.

Under the RLA section 27 addresses the issue of absolute ownership. But is starts
subject to this Act.

Registration takes effect subject to

1. Priority
Section 104 GLA , section 28 RTA , section 42 RLA, section 78 ITPA.
The issue of priority is looked at from a very basic angle. It is the date of registration
and not the date on the document. It isnt about presentation only ultimately the
document will be registered. Priority isnt by virtue that you presented it first but it
has been confirmed to be good.

2. It is subject to any encumbrances against the title section 28 RLA or section 23

RTA.

3. There are minor interests which arent usually noted against the title. Section 28
RLA. They arent noted even in the register. Here you conduct an inquiry where
you ask if there are interests.

4. An overriding interest. These are such encumbrances, interests, rights and powers
not entered in the register but subject to which registered disposition of land are
by the Act deemed to take effect. It demands that there must have been an
inquiry conducted. National Bank Limited v. Hastings 1964 Ch 9

Under the RTA, overriding interests arent expressly stated or outlined but various
case law have consistently upheld customary rights.

Under RLA section 30 lists possible overriding interests especially when it comes to
customary law rights.
In the case of Obiero v. Opiyo, Registration under RLA extinguishes all customary
rights.
This was followed by the case of Esiryo v. Esiryo

In the case of Kanyi v. Muthiora 1984, they actually survive and arent extinguished.

In 1986 in the case of Marigi v. Marigi 1996 469 it court of appeal held that
customary law go with registration.

Mbui v. Mbui
Held after considering all the cases that registration under RLA doesnt extinguish
customary interests, and arise out of the trust in section 28 of RLA and are
overriding interests as per section 30.

Held that rights under RLA of a registered proprietor are subject to the Act and
subject to the rights and encumbrances noted in the register and overriding interests
under section 30 and such included customary rights which arose out of a trust.

As a conveyancer, you must always never forget about claims under the customary
law.
Overriding interests under land law have eroded the purpose of Torrens system and
the land system. These interests that are not noted in the register can inhibit one
from acquiring an interest in land.

2. Registration of title and of grant brings land under a particular substantive law to
be applied. The law applicable either procedural or substantive depends on where it
has been registered. If registered under RTA then substantive law is ITPA of 1882. If
 the land is registered under RLA procedural law is under RLA and so is substantive
law.
Section 163 of the RLA reserves the application of common law as modified by
doctrines of equity. This section excludes customary law. This tells us that the court
of appeal could be wrong in its holding

3. Only registered documents will be allowed to be used a evidence both in RTA, RTA
and GLA

Lease for less than a year in GLA and RTA or less than 2 years in RLA then it becomes
a contract inter parties.

How and when is registration effected?

There is no time limit under RTA, but the sooner the lodge your document the better.
Under RLA you need to lodge the document within a specific period of time. Section
40 within 3 months, failure to do so penalty of 250 shillings every quarter. There are
specific forms which must be presented in quadruplicate in the relevant registry.
After this, will be approved and signed and the appropriate registrar.

Section 316 of the Companies Act need to register with the registrar of companies
within 42 days to ensure no fraudulent references when the company is being wound
up.

If its a company guaranteeing a loan it must be noted, cooperative societies you

need to register any mortgage or charge in the registrar of societies and companies.
There are particular forms to be signed.

Lecture 4

The period before the loan agreement and even before the conveyance, there is always a
3rd party who takes part in the process. This person is usually a lawyer or an estate
broker.

Brokers and their role before, during and after conveyancing.

A broker is a person who acts as intermediary or negotiator between prospective buyers
and sellers in all fields of trade and commerce generally.
In conveyancing they are known as estate agents. Estate agents as they are known and
statutorily recognized, legally deal and negotiate sales, leases, mortgages at a
commission.

Cap 533 of Laws of Kenya Estates Act, do provide brokers in conveyancing and they
are referred to as estate agents.
As a lawyer and conveyancer, a client approaches you and tells you to deal with a
particularly estate agent, as a conveyancer you must try and familiarize yourself with Cap
533.
You must not allow an estate agent to take over your role as a conveyancer. Most of the
time they come and tell you they have already conducted the search at the registry and
present a clean title but as a lawyer you must never accept this.
As a conveyancer you must not get into the shoes of an estate agent. The agents
negotiate and deal with transactions and even come up with terms of transactions. It
isnt for a conveyancer to put themselves in the agents shoes unless you are specifically
asked to do so. The law provides this, and the Advocates Act in the remuneration order
actually provides for the rate of the commission a lawyer is able to earn as an estate
agent.

If an estate agent and client come to your chambers and avail their terms all you have to
do is advice the client whether they are legally acceptable and enforceable.

Rajdip Housing Development Limited v. Wacira Wambugu carrying on business as

Wambugu & Company Advocates civ. App. No. 4 of 1991
The seller asked the advocate to instruct an estate agent to get a buyer or property at
the asking price of 100 million. The advocate instructed the broker who got a buyer for
200 million. Then the advocate moved a step further and managed to secure 225 million.
When the seller realized what happened he went to court and claimed unjust enrichment
and instructed the advocate to refund 25 million.
The court of appeal alluded to the fact that advocates should actually earn commission.
Facts of the case:
Rajdip housing the appellant entered into a sale agreement dated march 30 th 1990 to
sell to Ufundi co-operative property situated along Uhuru Highway at a consideration of
KShs. 225 million. Wambugu & Co. Advocates acted as advocate for the appellant while
Mr. Satish Gautama acted for the Society.

It was a term of the Sale Agreement that 125 million represented the developments and
expenses and the balance of the purchase price of 100 million would be paid by
installments as stipulated in the agreement. The advocates of the appellant refused to
forward some of the money (25m) to the appellants as part of the sale price claiming
that fees of some firms needed to be settled. These included fees of Lobi firm as
commission agents for the purposes of securing a purchaser and negotiating on the
purchase price of the property. The appellant contended that the advocate had no
authority to negotiate the sale of its property or to bind it in any way without its
agreement nor had it held them out as having such authority. The advocates argued that
the agreement was ambiguous and therefore extrinsic evidence was needed to show the
intention of the parties. The court was of the view that an instrument must be read most
strongly against the party who prepares it and offers it for execution. This is the rule in
the maxim verba fortius accipiuntur contra preferentem. Also unless otherwise shown
the presumption is that the advocates for the vendor prepare the Agreement of Sale.

The other issue is on deposits. An advocate is an advisor to the client and should advise
him on the purpose of deposits and who should be holding the deposits. This is because
if you are acting for the seller you ought to hold the deposit. But as an advocate you
may wish not to interfere or not. But it is advisable just to give advice. The only way is if
you are able to determine whether or not the deposit is safe.
As an advocate you may also want to know whether the estate agent you are dealing
with is a licensed agent, and not take big companies such as Lloyd Masika as licensed
agents without verifying. As an advocate you may find that those agents that you
thought are licensed arent even estate agents because in an agency one director and
shareholder must be a qualified and practicing estate agent so dont determine by going
by the name. Therefore after ascertaining this then legally the estate agent can hold the
deposit.
Always have this advice in writing, if the client doubts you on whether the estate agent is
qualified or not.
At the end of it all the loss may lie on the client there is no way you can get the money
back because most of these agents arent covered by a professional indemnity cover like
advocates are and therefore the client must always realize that the lawyer has nothing to
loose as he has a P.I. Cover.

The commission paid to the estate agent is another issue that must be advised by the
advocate to his client. The commissions are provided for in the estate agency rules in
Cap 533. Their commission extends to even 7.5%. While lawyers take 1% almost in fees.

If the client has come to you before it is agreed with the estate agent, he is able to draft
a short agreement, and the most critical thing is to ask what the client wants. Then ask
the client if it is an exclusive tender he is giving to the agent, if there is a time limit he is
giving the agent and whether or not it is an open ended agreement. Most clients just
want the agent to get a ready, willing and able buyer. There is a difference between a
ready willing buyer and a buyer who actually completes the agreement.

Lawyers are always in a hurry to look for a ready willing buyer and if this is not
completed could be disadvantageous to the advocate as he may pay the client for
negligence.

Article 30 of the remuneration order allows the advocate to act as an estate agent.
Banks always charge a commission on such transactions and this article provides that an
advocate can earn this so long as no other person is earning the commission. Banks earn
a commission as they facilitate the transaction and in such instances can the advocate
earn his commission?

Before the formation of any enforceable contract under Section 3 of the Law of
Contract Act, you meet the client for the first time and this is crucial as the client has
already met the agent. Therefore when meeting the client you must always prepare
yourself so that the client knows the mark of a serious lawyer. You must never discuss
fees in the first meeting because you dont know the extent of the brief to be given.

Conveyancers should be able to advise on tax matters, finances and costs involved in the
transactions. At the end of the meeting, ask if there is anything you as an advocate need
to know or the client needs to know. This clarifies any outstanding matters.
The instructions you get will strictly speaking rely on the contracts you are going to
undertake. The first instructions you get must be detailed, details of your client, details
of the other side even spelling of names need to be looked into. Such details must be
carefully looked into because rectification is very difficult, it can be very long and costly.
Especially when rectification is done when the client has passed on is very difficult.

1. Take the names and spelling make sure all is verified. Money laundering today in
the world is getting to an all time high and if involved in any international
conveyancing you must verify the very basic details as sometimes such
conveyancing could be used to traffic drug money.
2. Take the address, a verified address.
 3. At the initial interview, look at their capacities. For instance if the client is a minor,
you advise the client to use a trustee. If transferred to the minor there are
repercussions because the minor will not be able to transfer the property or deal
with the property as he/she may please. Or in certain circumstances the trustee
may even misuse the property. The issue of joint tenancies where such systems
are recognized by registration systems. Distinguish joint tenancy and tenants in
common. In joint tenancies the interest is bound and if a tenant dies then the
other tenants gets the share of the deceased tenant.

A lawyer can be sued if unmarried couples are advised to take up joint tenancies. In co-
ownerships if advising a mortgagor it is critical to ask the wife to obtain independent
legal advice as this came from many common law cases like:

Barclays bank PIC v. OBrien

In this case the House of Lords held as against the court of appeal, a wife who hasnt
obtained independent legal advice any such mortgage will be void but only as against
the wife.

This is the law, but you ask as a legal advisor arent you giving legal independent advice?

4. Details of the actual conveyance. As an advocate you need to know the plot
number, if the land only is being sold or there are fixtures. The plot or land
reference number helps you to know which substantive law is applicable. You
may also want to know the financing of the transactions for instance if it is a sale.
Because at one time you may have to make an undertaking. Clarify if the client
isnt borrowing the advocate should at least know and be certain that the money
isnt coming from some illegal source. The advocate needs to explain the effect
of undertakings. Many times advocates are sued for undertakings still unsatisfied.
Undertakings are crucial because you may need to discharge an encumbrance.

5. The authorization from the client that you may disclose information related to
the other members in the chain or the parties. There is the duty of confidentiality
and you need permission first. You need to ascertain and get formal
authorization. If the client denies this permission what should the advocate do?
Breach the duty of confidentiality or let go of the brief. Here you try and advise
the clients of the repercussions in that if the information isnt disclosed the
transaction could take longer than expected. There is a duty by the advocate to
uphold the dignity of the client, because if you keep everything in confidence
most of the time the client would come back to you. If the property is charged to
a 3rd party you ought to be in a position to disclose the amount the client is
borrowing.

Mortgage Express Limited v. Bowerman & Partners 1996 2 All ER 836

In this case you owe to the lender information on how much your client is to pay
to the lender. Here you act for the buyer who wants to redeem another mortgage. In this
case there were questions that were asked on the law firm but it was held the advocate
doesnt just protect the client but also 3 rd parties for the seek of earning fees. You
shouldnt encourage such fraud just to earn your fees.

Holding of the case:

A solicitor who, in the course of investigating title, discovered facts which a reasonably
competent solicitor would have realized might have a material bearing on the valuation
of a lenders security, or some other ingredient of the lending decision, had a duty to
point out that out. There was, however, no general principle requiring a solicitor who
acted for both purchaser and lender and who had given information to one party to pass
that information on to the other; the question to whom he should pass the information
depended on the relevant interest of each client,. On the facts, it was clear that the
advocate would have failed in his duty to the buyer if he had not disclosed to him the
information that he was paying much more than the valuation and considerably more
than the immediate vendor of the property. Moreover, as a question of fact and degree,
it was impossible to escape the conclusion that, had be applied his mind to the facts, he
would also have appreciated that that information might have caused the plaintiff to
doubt the valuation of the property as security for its loan. The advocates failure to pass
information to the plaintiff was therefore negligent.

6. You may also ask especially if you are acting for the seller details about the
property for instance the physical standing of the property because any good
conveyancer will advise his client to inspect the property he wants to buy. Here
you are bound to receive pre contract inquiries which are searches that inquire
on the physical structure of the property. When acting for the buyer at the initial
interview you dont really tell you client to go and investigate but if its the seller
you even have an evaluation report. Advocates must be equipped with all these
information so that you arent sued for negligence.

7. Also the issue of conflict of interest must be addressed. That is if you are acting
for either seller or buyer or both. The law dictates that an advocate shouldnt act
where you foresee conflict. But conflict again is relative. For instance you cant act
for the borrower and the bank and you draw up the conveyance. There are
exceptions to this rule, first is if both parties dont know each other at all and
have never met, secondly is the arms length transactions that relate to those who
have blood relations for instance mother and son or during the course of
conveyance the common law allows you to act for companies that have been
there for many years, thirdly where the parties consent that the advocate acts for
both parties. This issue with this is when the matter becomes contentious then
taking a stand will be difficult. When you act for a bank in transactions if there is
a dispute between you cant act for many. King woolen Mills v. Kaplan &
Stratton and Jambo Biscuits v. Kaplan & Stratton.

8. The other issue to be discussed is fees. Most clients always ask up front how
much it will cost. Discuss the issue of costs as the last thing. There is a lot of
undercutting in the conveyancing world but as a conveyancer you must tell the
client how much it will be in terms of scaled fees and how much discount can be
given. Not only should advice be given on the advocates fees but also costs for
instance registration costs, stamp duty. Most lawyers talk about stamp duty last
because most clients arent aware that there is an additional cost in terms of
stamp duty which stands at 4% of the cost of the property. Most clients who do
know of stamp duty dont really know who receives it and most of the time think
that this amount is retained by the advocate.
 9. Lastly ask for copies of the title documents. After the interview you can now start
drafting the necessary letters. These letters should be written on the same day
and as soon as possible. Such letters include simple letters such as those
thanking the client for retaining you. You also write to the other advocate. In the
letters an advocate needs to be very firm and keep the English as simple and
clear as possible. Courtesy also demands that you write to the estate agent also
thanking him. Also an advocate should remember to renew his/her professional
indemnity cover. Where there is no title document then no interest can be
registered. There are unregistered parcels of land registered by way of power of
attorney. Problem is that up to 10 powers of attorney can be registered on one
piece of land. The only reason you ask for a title document is that you are able to
finalize the transaction.

10. Inspection of title, here you want to know that the interest that will be registered
is genuine and good. The process of investigating title is conducted for 2 main
reason, one is just the mere comfort of having good title, secondly the caveat
emptor imposes on the person to benefit the duty to satisfy him or herself that
the tile he/she is about to obtain is good. In conveyancing the caveat emptor rule
doesnt mean inspection is enough because the seller is under no duty
whatsoever to reveal or state latent defects. One of the latent defects could even
be hidden in the title itself, because it is up to the buyer to investigate the title.
Investigation of the title is done by search on the title and secondly through pre
contract inquiries. Thirdly by inspection of the title or physical investigation of
the property itself followed by requisitions.

LECTURE 5
Investigation of Title

The only reason you ask for title is to investigate the title.
This investigation is done by

1. Conducting a search,
2. Pre-contract inquiries and
3. Requisitions

There are two reasons for conducting investigation of title

1. Doctrine of Caveat Emptor which translates to buyer beware. This doctrine

isnt confined to physical restraint as to property in the case of sale of goods but
the inherent structure of
The law from time immemorial has limited the rights of the seller so that he can let
you know the defects especially latent defects of the property. Latent defects arent
visible to the open eye but the seller is aware of the same.
Conveyancing is of no exception to the duty of the seller to disclose latent defects, it
is up to the buyer or mortgagee to investigate the title.
 2. To ascertain its validity. You need to ascertain that it is valid and to an extent
probably discover quasi-encumbrances; these are upon inspection of the title you
are able to discover. E.g. an overriding interest is a quasi-encumbrance.

Investigation by ways of searches

Searches are as pivotal as the other side of the coin that causes them. What causes
investigation is registration itself. There are a variety of searches that can be
conducted in any given transaction, as far the conveyancer is concerned it is always
the title they ran to, other searches must never be ignored, such searches include a
search at the companys registry to discover if the seller is a bankrupt or the
company itself is insolvent. If a company is insolvent and a winding up petition has
been filed if within 6 months the company purports to dispose of its property it will
be seen as fraudulent. Section 316 of the Companies Act, this section isnt really
used.

When any company is selling land it is advisable to trace the file, it is important to
find out if a winding up petition has been filed.

You may also wish to conduct a search at the local authority, this is because the local
authorities are the center of planning and all building plans must be approved by the
local authorities. When you do this for purposes of planning you will never be
allowed to put a building with more than 6 stories or multi stories for instance.
Usually this are indicated against the rates records, when they approve plans they
may decide that they want to revalue the rates of any particular property.

Search at the lands registry

There are two modes of searches
1. The official or postal search
2. The un official or personal search

Official search
This search is done at your request by the registrar. And the registrar issues you with an
official search certificate. This is under the RLA. Under the RTA and GLA the registrar
certifies the title in the deed file. In GLA it is the folio certified.

In unofficial you carry out the inspection yourself after paying the requisite search fees.
The difference is just to this extent that one you do it yourself while the other the
registrar does it for you. Under RTA and GLA you had to apply to the post office by way
of registered mail and the registrar sends it back to you through the same.

Look at section 39 of RDA this provides only for personal searches

Section 31 of RTA provides for personal searches
Section 127 of GLA provides for both searches
Section 36 of the RLA

In October 2005 the ministry of lands through the acts of the chief lands registrar stated
in a circular that documents were disappearing from the registry and thereby
discontinuance of unofficial searches, and this circular in the teachers view is completely
illegal.
The advantage of personal searches is that you are able to access a document besides
assessing the register; you are able to read all the covenants pertaining a particular
parcel of land. Under GLA there is even some talk of how you will be bound by acts by
the original transferee and this could be dated many years back.
The advantage to be able to go through the unofficial search completely outweighs the
mischief of plucking out documents from the registry. This mischief could have been
circumvented by having high security.

Section 144 of the RLA, there is provision for indemnity for losses sustained by reason
of defective official search which is used or utilized by a party to effect a transaction. The
condition here is that that party was not part of the events that lead to the defect.
If the registrar conducts a search and the entries turn out not to be true and you buy a
property and it turns out you cant buy it then you can be indemnified by the
government.

Section 143 of RLA when you apply for an official search and pay the requisite fees and
with the consent of the registered proprietor you notify the registrar of you intentions,
then for at least 14 days all dealings with that particular piece of land are suspended and
it wont matter if another document is logged as yours will have priority.
The RTA, GLA and LTA to an extent also provide for indemnity if the registrar has acted
in good faith only. It doesnt state if the registrar was negligent.

The advantage as to suspension unlike RLA isnt there in RTA, LTA and GLA what is there
is any document signed by the registrar will be admissible in court in evidence until and
unless it is proved otherwise. The burden now shifts and you no longer need to prove
anything.

Another advantage of searches is that it protects conveyancers from suits of professional

negligence if the title is faulty and is actually relied on.

What you should aim is to gather anything covered in the title and that is why personal
searches are in order.

What to look for in searches

1. Details to ownership
2. Terms and rent if property is leasehold
3. Special conditions especially on leases
4. User on the property, is it residential or commercial
5. and encumbrances

If it is under RLA, GLA and RTA you are given all this information against the register.
Under RLA the registrar indicates what he has seen from the register.

There are hiccups in conducting the searches for instances missing deed files, missing
pages in registers or folios. We therefore should recommend the computerization of the
lands registry. What is happening today is that all the documents are being scanned. But
scanning needs expertise and conveyancers who should state what documents should
be scanned and which documents shouldnt be scanned just for the sake of it. For
instance a document that was registered in 1920s and today really doesnt have much
effect shouldnt be scanned just for the sake of scanning it. All vital documents must be
scanned.

One may not find everything in the register or the parcel file or even in the title itself and
one search that isnt provided for which is the historical search can be conducted. Every
parcel of land has history in it. Apart from the parcel file and register and deed file there
is the correspondence file. This correspondence file is a file that contains
communications from the land office for instance if there is change of user, or the type
of use of property.
It is advisable in view of the recommendations from the Ndungu Report to tell the
client apart from doing the search you also look at the correspondence file. This file is
very private though but you can write to the commissioner and you may get the
information that you require on the history and allotment of the land.

The recent case of Gitwany Investments Limited & Taj Mal Limited HCCC 114 of
2002 (Unreported) Read this case!
Justice Lenaola relied on the evidence from the lands office on the history of the land
which was the basis of his finding.
At the land registry there is a search that you may wish to take and that is the search on
pending documents. Once you book documents in the lands office it is given a number
and the date it was booked. This is entered into the register and forwarded for
registration. If you do a search and the deed file, green card and parcel file are missing
then the documents are put in the pending file.
As a conveyancer you must discuss the search results with your client and you also clarify
search results with your colleague so as to get the true picture of the status of the
property. This is also to avoid misrepresentations for example in the amount valued of
the property.

There is also a search that can be done at the survey department. The survey department
avails through public index map which helps to determine if the property is actually
registered. The survey department is very important. This is because registration always
starts at the survey department as this is where the LR number is gotten from. This
department has been moved from Ardhi house to Ruaraka. It costs 300 shillings to get
information from the index map.

After this you ask your client to inspect the property also. There is debate as to whether
or not this is a duty that is heaped on any conveyancer, in the teachers view this
shouldnt be heaped on the conveyancer as it is not his business to inspect but advise
the client to inspect the property if there are any defects e.g. are there people occupying
the property.

Physical inspection of property is 5 fold:

1. Who is in actual occupation which basically investigates those undisclosed
encumbrances.
2. checking the boundaries of the property
3. check any rights or interests affecting the property
4. reason under caveat emptor rule
5. to check on fixtures and fittings of the property which you may have to include in
the agreement itself and it is important to get description of them.
Pre-contract Inquiries
Once the seller has inspected the property and a search has been done then you move
to pre-contract inquiries.
These are intended to seek or illicit information on matters not covered by official and
personal searches but matters relating to the physical condition of the property.
Ideally they should be targeted to the contract itself.
It is important to always ask:

1. What are the development prospects of the property itself and if possible if the
vendor is aware of the neighbouring property? Would the neighbour agree to
sale or development, or even the neighbourhood association agree for
development of the property in a particular manner?
2. Are there any physical defects to the property because the answers to pre-
contract count. The vendor is under no obligation to volunteer such information
but if they do so they must tell you everything of the physical structure of the
property.
3. Are there any disputes existing in court or before any tribunal touching on the
property.
4. If there are people in the property it is good to know their status, are they
squatters?

As an advocate for the vendor be very cautious as you answer any pre-contract enquiries
as half the time or more often than not are included in the pre-contract inquiry. If there
is a physical defect you state you are not under any obligation to answer but the
moment you commit your self you must answer.

In the UK the Misrepresentation Act of 1967 makes you as an advocate if you dont
disclose any material fact out of negligence or intentionally then under the
Misrepresentation Act you may liable to parties suffering from that non disclosure. This
statute isnt a statute of general application, and therefore in Kenya we dont have a law
that is remotely close to this.

Requisitions
Some questions may arise not on the basis of the search, or physical inspection of the
property but rather from inspection of title document or abstract of the document
supplied to you. A seller as we said earlier is not bound to disclose information on the
property.

You need to examine the title document; this document can be supplied in 2 ways
1. From the other side
2. Or sent to you at the completion time which more often than not is the case.
The effect is basically the same. But it is encouraged to do this before the contract is
executed.

The LSK provides that requisition be sent before the contract is completed. It is
advisable when you are doing the preliminaries.
When you inspect the abstract of title all you need to do is to find out if there are
any defects and deduce from it. Be pessimistic when deducing so as to know all the
details and not leave anything to chance by overlooking. Try and check the term in
the title and also the rent provided for in the lease itself if it is contrary to what was
indicated to you.

In the cases of sub leases it is hard to get to the title itself, you hardly see the lease
itself but what you see is the certificate of lease. Ask for the lease if you can, ask the
other party because if you get the certificate of lease there isnt much written when if
comes to covenants or any overriding interests that affect the property.

Check on execution of the title document itself. This will even apply to certificate of
leases, has the grant been properly executed by the commissioner of land on behalf
of the president has it been witnessed? These are all questions an advocate or
conveyancer for that matter must ask hi/herself. Inspect the identity of the property.

Under GLA most are just deeds and when it comes to execution under GLA there are
witnesses and it is executed in a particular way. The conveyance is a deed and not
really a title. It is critical not to just stop at execution of both parties as this could
involve other parties.

Inspect and identify encumbrances are there any encumbrances that werent
reflected in the register.

Identify any restrictive covenants and also inspect if stamp duty was paid, may be the
document was under stamped or over stamped.
Requisitions are such objections or queries to the title that come about from
inspecting the title, they are directed to the vendors advocate, they are technically
mere questions because they require the vendor to remove the effect or the doubt
revealed by the inspection hence their name requisitions. You are requiring the other
party to remove the defect.

Answers to requisitions must be availed within a reasonable time whether before or

after and the proper cause is to state the defect that you have detected and then ask
for particulars and confirmation that it will be removed. If for instance a signature
hasnt been properly witnessed find out if the witness can be found and whether
he/she saw the actual execution.
In a conveyance by lease by a company under the companies act there is a seal, and
either a director or two or the secretary to sign it. If anything is missing ask if this is
proper and if the company states it is not a defect ask for the memorandum of the
company to counter check. If it is by power of attorney ask if that power is still okay
and hasnt been revoked. In Kenya before you die or until or before you go insane
the power of attorney still exists.

It is advisable to straight away seek a legal opinion when dealing with foreign
companies, get a confirmation that execution isnt defective and this opinion can be
gotten from an advocate in that country where the company is based.

If there are any encumbrances detected then ask if they will be fully discharged
before the completion or after the completion period. If acting for purchasing it is
advisable to do the discharge to the bank.
 If you make a requisition and the answers dont come as expected what do you do as
an advocate?

It is critical to discuss this with the client. The best approach is to proceed with the
transaction as you can get damages with the client if the correct answer is not gotten
from the requisition.

With regard to mortgagees position it is like that of the person buying a piece of
land, it is imperative he gives a good title. The mortgagee should conduct a search
and shouldnt concern oneself with pre-contract inquires.
Lecture 6 14th June 2006

Other basic requirements in conveyancing

One of the first primary requirements of conveyancing is execution and attestation of

documents. And execution means the signing of documents the purpose of which is to
authenticate the document and have it genuine, at least from your own eyes and anyone
who would want to enforce it against you.

A signature refers to the affixing of a mark to represent its name with the intention of
authenticating the document so as to make it binding on the person making the mark or
writing his name.
However, so long as that is your ordinary and usual way of identifying yourself or your
mark then it will suffice. Typing of a name is not a signature but embossing your stamp
has been deemed to be a signature and you dont need to accompany it with anything
else. Do more reference on this

It isnt wise for an advocate to stamp and say that is his signature but for a mortgagee it
can be deemed to be his signature. Any document required to be signed can be signed
by anyone else who has been authorized to sign on behalf. This can be done through
powers of attorney. When it is you acquiring the interest you can authorize anyone to do
so on your behalf. Section 3 of the Contract Act states that for an agreement to be
enforceable it must be signed, however it is arguable that it provides for powers of
attorney to be used. Previously, Section 3 which was amended provided for documents
to be signed by the parties. But the amended one that commenced on June 1 st 2003
under Section 6 provides for companies to appoint power of attorney but there is not
talk of an individual having a power of attorney to sign.

It seems that the intention of the legislature was to exclude the power of attorneys to be
used in signing of documents. Since the Common Law allows everyone to obtain powers
of attorney and statute doesnt take it away then strictly speaking it can be used. But
soon there will be need to amend the Act and provide for it.

The ITPA and RLA provide for execution of documents. Section 109 of RLA dictates that
all documents intended to dispose of interests in land must be signed by both parties,
whether lease, mortgage e.t.c.
It allows the registrar to dispose with the signature of any party except for transferors
and transferees. Even in the case of lesees and lesors the registrars can dispense with the
signature but this would open up a whole new world of fraudulent dealings.
There is often the question that if you go under section 109 and youre to do a
document and you are transferring land to yourself by way of assent, must you sign it
twice or write in the testimonium that it is to be signed by both parties? It would appear
from the Act that there are two signatures required.

For a company, under RLA there must be a seal of the company which is to be witnessed
by any officer of the company and one director. Occasionally memorandum and articles
provides that documents will be sealed, for the chief executive section 3 (3) of the
Contract Act. This section defines disposition and states that section 3 notwithstanding
section 109. Remember these amendments came into force on 1 st June 2003 while the
RLA takes as back to 1963

The RTA doesnt have an explicit provision on execution, but by implication they must be
executed by all parties involved in the transaction and here you invoke the provisions of
section 3 of the Law of Contract Act. Section 99 of the RTA is to the effect that parties
will sign all documents that will effect the dispositions of their interests.

Legal notices 146-153 (Confirm) that brought in the requirements of photographs to be

affixed on documents, all documents must be signed by all parties. In regard to
substantive law in ITPA apart from requirements that all documents other than mortgage
be signed and witnesses by an advocate, any dispositions by way of gift must be
executed by the parties concerned by two independent witnesses

La Belle International Limited v. Fidelity Bank (2003) 2 EA 540

Justice Nyamu, interpreted Section 99 of ITPA that it doesnt include charges which are
registered under the RTA but stated that the document needs to be signed by both
parties. It therefore appears that the Act that hangs around all the statutes is Cap 23
Contract Act. It is an Act that you must never forget, because it simply states if you
havent signed the documents then you cannot enforce those very documents. This Act
and its provisions came into force on June 2003. There are arguments that from GLA LTA
RDA documents need only to be signed by one of the parties. The law gets rid of the
requirement of a seal as a deed can only be enforced when a seal has been affixed to it.
However it can still be good in the same way the requirements that common law
requirements should be used.

Anytime you talk of disposition always check with the Contract Act first then the other
land acts later.
Section 123 ITPA

Execution and attestation go hand in hand

A document must be signed and witnessed for it to be used. Attestation and witnessing
are alike, just that in attestation it is where the person witnessing the document attests
that he can stand before a court of law and swear that he saw the vendor executing the
document in his presence. He is therefore like an independent witness.
If you are interested in the contract you are supposed to attest then that attestation
given will not be good.
Problems usually arise when an advocate attests to his/her spouses signature. In such
questions truly there is an interest. When you witness a document as an advocate or
attest it as an advocate, if you witness the signature under section 69 and the
requirement that there must be two witnesses then there will be a problem.

When you attest a document make sure that whoever is executing the document is
actually present before you.

The RTA gives also Judges, Registrars of Titles, Justices of Peace and Registrars of the
High Court and their deputies power to attest documents if the documents are prepared
in Kenya. Any other person attesting a document will not constitute good attestation
and it will not be registered.

From the UK, Common wealth countries, Uganda apart from the judges in those
jurisdictions or notary public may also attest to the execution of the document. Any
other place in the Americas, the Kenyan consular is the only one who can attest a
document. An exception is the president; if the president signs it then it doesnt need
attestation. If anyone signs on behalf of the president the attestation shouldnt apply to
him but many times the attestator is the registrar witnessing, and authorized and
approved by the president signed by the registrar.
When the president is acting in his official capacity for example allotments it doesnt
require his signature to attest.

Under RLA the attestation takes the form of verification. You have to verify and confirm
that whoever is signing is the person who is stated as the purchaser or vendor. Section
110 requires the signatory to appear before the registrar with a witness unless that
signatory is known by the registrar. It can also appear before any prescribed person or
officer who must show the identity and the voluntary nature of that effect.
RTA because of the recent amendments of legal notices make this requirements

Under RLA precisely in the fourth schedule, lists the following person who can verify
documents. Advocates, Registrar, Judges, Administrative officer, Superintendent of
prisons or a bank official. There is more leeway in the RLA and more people are included.

The legal notices of the RTA, the fact that they apply to RTA means that verification is
also a requirement under the RTA because of the requirement of photographs. Find out
more on this.
Verification nowadays applies to almost all registration regimes.

Powers of Attorneys

It can be argued that under Cap 23 when it comes to conveyancing there is no room to
allow anyone to sign for you as an attorney. Generally a person can appoint another to
be his legal representative and to do and perform and act that he the donor could
legally do.

A power donated under power of attorney could be general and wide or specific and
limited and could include the power to execute documents and as well as the power to
dispose of documents. Powers of attorney are strictly construed so if the PA allows you
to only execute documents does it allow you to dispose of any other item? You must do
the power you are given, if you are given the power to dispose an interest and transfer
the property then strictly construed it doesnt allow you to charge that property and vice
versa.

The question then is can you as the attorneys donate it?

If the power of attorney allows you to then you can donate it. You must therefore be
careful how you draft this power so as to ensure the powers involved.
An area where PAs are used is selling properties that arent registered, if there is no title
to a particular property and a client wants to buy it then the only thing you can do is
prepare a power of attorney. PA versus power of execution is recognized under RTA
section 50 and 51 and recognized under RLA section 114-117, both of these actually
provide and prescribe various forms on how the power of attorney should look like.
Under the RLA RL7 can be amended only by the permission of registrar section 108.

If executed by an attorney you must confirm that that power of attorney has been
registered. The power could be available but is it stamped and registered under the
register of the power of attorneys?

Stamp duty

Stamp duty is basically in the realm of taxation and is the tax raised by the government
by requiring stamps to be affixed on the document.
It is levied on designated documents in relation to conveyancing and any instrument
relating to property will fetch stamp duty if there is transfer or any variation of interest in
a particular piece of property.
Cap 480 of the laws of Kenya, gives us the documents which will fetch stamp duty and
the amounts in percent form. The schedule to that act specifies which instruments invites
stamp duty and it must be paid within 30 days of execution of the document if the
document is prepared in Kenya, if outside Kenya it must be paid within receipt of that
document.

Kenyan documents are rarely dated, Section 6 states that it must be paid within 30 days,
completion could take 90 days, but the date you are making the document is the date
you are making the contract, it the Act states you must pay within 30 days, many people
dont get their documents till they get valuation. There are stiff penalties for not paying
stamp duty 1 year in jail or payment of 100,000 but if it is done by a firm like a law firm
only 5000.

If there is delay in payment, the officer in charge can levy a penalty. Under section 20 the
officer can waiver if the circumstances really demand it. The penalty really varies from
case to case.
All dispositions in land will be found in the schedule of the stamp duty act section 111
RLA supplements the stamp duty act.

In relation to stamp duty you must make sure the amount you are paying as it varies on
the type of document.

When it comes to charges the stamp duty is levied on the amount that is being
borrowed, but when it comes to transfer there will be a valuation done by the
government, advise the client that stamp duty in transfers is very important and you
must pay it to be a good conveyancer.

A transfer within municipality will fetch 4% of the value (ad valorem) of the property.
Before, it used to be the consideration that was used but today it is the actual valuation.
If it is outside the municipality it is 2%
For mortgages and charges it is 0.025% 2 shilling for every one thousand. The penalty is
5 shillings for every one thousand

For discharges and reassignments the duty is 0.05% or 5o cents for every one thousand

Leases, the duty if the lease is for a period of more than one year but lease that is 3 years
it is 1% of the annual rent, and 2% of the average rent if it is for more than 3 years. The
reason there is average is because sometimes the rent could vary within one given year.

In sub lease you cannot average the rent!

Read the schedule

Section 95 and 96 of the Act, an example is where Company A owes 90% of company B
what they would do is to get the sister company to guarantee the loan but if it doesnt
have any property. In that case transfer property from one company to another, this will
attract a duty of which duty again must be paid.

Who is liable to pay duty?

The Act just states that duty will be paid. In the case of transfers duty is paid by he who
is acquiring the interest, but when it comes to charges and mortgagees the person who
is borrowing will pay the duty.

Clearances
These are found provided for under section 86 of RLA which provides that the registrar
will not accept any document to transfer or invest or lease a particular piece of land
unless it is availed to the registrar. You get a registration certificate or statement of
clearance from the local council confirming that all the charges from the last 12 years
have been paid.
Note that the certificate of clearance must be availed at the time of registration. The
reason it is 12 years is because of laches.

There is a proviso to section 86 that leases shouldnt ask for it. The same provision is
found in section 23 RTA you need to clear all that revenue and they give a certificate.

There is also a land rent clearance certificate, these apply to leasehold properties.
Section 86 (a) is explicit on this but it states that all instruments in the dispositions to
land you must produce land rent clearance certificates.

Consents
There are various consents that are required vis a vis any disposition.

1. Commissioner of Lands Consent

Consent to lease or change of user. The consent comes off from the issue of land
rent. If its a freehold you dont require commissioners consent to deal with the
 property. Usually leasehold properties and grants from the governments usually have
covenants which state for instance you cannot subdivide it without the commissioner
of lands consent.
The commissioner can deny the consent if you are in breach of a covenant or if you
havent paid rent, or built or developed the property within 2 years. Section 54 (h) of
RLA this consent applies to all leaseholds.

2. Land Control Board Consent

This is found in Cap 302. This consent is to deal, transfer or vary or dispose of any
interest in land must be obtained by all agricultural land which is subject to that
transaction. You will be denied this consent if there is a foreigner involved in the
transaction this is under section 6 of the Act.

LECTURE 7
Sale Agreements
This is taking a disposition in land.
When you are disposing land there are many things that come with it. There are 2 stages
in any sale agreement

1. Contractual stage
2. Transfer stage

Until the enactment of the law of Contract Act 1st Jan 1961 it can be said that contract for
purposes of transferring interest in land could be made in any way as a contract for sale.
It could be done even orally and enforce the same in court. Upon the enactment of the
cap 23 there was a requirement that at least there had to something in the form of a
memorandum that the vendor has agreed to dispose of his interest in land. It could be
directed to anybody, but the act stated that the memorandum needed to drawn and
enforced against the person drawn for. But this created many problems because since
they werent singed by purchasers they couldnt go to court

Even as early as 1961 it had to meet the ordinary requirement of law of contract and of
course an enforceable contract will contain offer and acceptance together with the
intention to be bound by such offer and acceptance this meant that a contract to sell
land had to contain a clause saying that I john Doe have agreed to sell to Jane Doe my
parcel of land. Jane Doe had to agree that she will buy John Does land.

Such a contract to sell land had to contain consideration. There are some dispositions
that dont require consideration but in sale of land there is a requirement that there
must consideration.

Certainty, any contract that is ambiguous will never be enforced by any court of law. Any
sale agreement had to be certain to be enforced by a court of law. Certainty is usually
the most complex issue because both parties agree to the agreement but they are not
both certain as to how to complete and most of the time the courts will not try and read
the minds of the parties.
But because of the difficulties in title and the doctrine of specific performance, the law of
contract act had to changed vis a vis dispositions in interest in land and in 1990 an
amendment was effected to the Law of Contract Act effectively outlawing any oral
contracts or dispositions in land. When the law now dictated that to have an enforceable
sale agreement in land it had to be in writing and signed by both parties and the terms
had to in that single document that is contained in the amendment of section 3 (3) of
the law of contract act. Look at the definitions of dispositions and transfer.

When drawing documents that fall under GLA and RTA both parties must sign. When
acting for a bank it is important to ensure that both parties sign the document, as you
cannot be able to enforce any covenant on the basis of that document.

After 1990, all contracts for the sale of land needed to be in one document signed by
both parties in all events. The form it took really didnt matter and the requirement as to
signature is very critical.

If a sale agreement was created by correspondence so long as they didnt have an

endorsement that it was subject to a contract then it could be enforced.
If executed after 1990, if they made reference to other rules then it would not be
enforceable as everything has to be in one document.
It got rid of the term that they had to be in one single document but added another
clause that added terms to be incorporated by reference. Parliament must have realized
that the law society conditions of sale could be used as reference.
When it comes to signature must both parties endorse their signatures on both
documents or the purchaser sign the original and the vendor the counterpart is this
enforceable?

When looking at RLA always remember law of Property Act of 1925 of England. In
England you exchange the documents, so long as the vendors advocate is holding the
one that was executing by the purchaser and vice versa then it could be enforced. So
long as it is one document you are talking about.
The signature being in one document could be in both ways. You could have the vendor
signing one part and the purchaser the counterpart. Practice dictates that all these are
signed in one document but when doing this there is always delay. Sometimes parties
then become dishonest and change their mind in executing the agreement.

Even with all the requirements being met the agreement will not be enforced if it isnt
certain. All the particulars must be certain to the parties to the execution. The person
who has been indicated as the purchaser is the one who should sign it otherwise there
could be uncertainty.

Muchira v. Gesima Power Limited Mills & Mills Limited 2 EA 2004 168

In this case, the vendor sold land to the purchaser for 10 million. the parties drew the
agreement themselves but an advocate witnessed execution. 10% of the purchase price
was to be paid and was paid on execution. 20% was to be paid later. The balance of 70%
was to be paid within 90 days or when the title was registered in the purchasers name.
Another term was that possession was to be given to the purchaser on completion or
when he paid the second installment of 20%. The vendor alleged default and sued for an
agreed compensation of 40 % liquidated damages of purchase price. The court of appeal
held that the agreement couldnt possibly be enforced as there was no meeting of the
minds as firstly there was no clear provision as to when the balance was to be paid and
secondly there was no clear provision as to when possession could be give. It was the
court of appeals view that the agreement didnt meet the requirements as to certainty
and could therefore not be enforced and the vendor could not get his 40% liquidated
damages.

Whether the advocate was acting for them or not, he should have ensured that whatever
conditions there are in the agreement must be certain. The court of appeal didnt try to
read some sense in the agreement, but could have implied or inferred some reasonable
period the transaction was to be completed.

One clause that should be in any sale agreement is the saving clause, it doesnt matter
how it is drawn, but it doesnt matter that any term is not certain or null and void or
illegal for that matter all other terms will still stand good.
The saving clause as a conveyancer should always be in an agreement, avoid all other
bad terms that can be declared null and void.
In sale of land unlike sale of chattels because of the nature of land there is the issue of
having this in writing so as to get rid of fraudulent dealing and not taking advantage of
one party.

The court of appeal should have been more reasonable in this case. Someone who isnt
an advocate can draw up a sale agreement but in dispositions they must be drawn by
professionals.

Any contract for the sale of land that contains one of the parties the consideration, the
identity of the property sold is as good and enforceable as any other contract, however
problems will arise when there is a dispute between the parties and the disputes come
from when the payment is to be made, who is to produce the title or effect registration
for that matter, when is possession to be given to the purchaser and who is to take care
of the property before you give possession. Consequently in conveyancing advocates
and legislatures have continuously and consistently continued to create new demanding
terms and obligations that guide any party to the agreement

In regard to legislation Section 54 and 55 of the ITPA these contain basic requirements
of the contract, rights and liabilities are outlined not fully but are there to help the
parties.
Section 55 of the ITPA states that if there is no agreement to the contrary then the
vendor is under an obligation to disclose any latent defect that he/she is aware of,
he/she must also produce the title of the property, he must answer to the best of his
information and knowledge all inquisitions and pre-contract inquiries, he must execute a
conveyance as tendered by the buyer, he must pay all outgoings and discharge all
encumbrances before completion, he must give possession to the buyer and all title
documents to the buyer on payment of the purchase price, he must also take case of the
property, he is also deemed to guarantee title to the property.

On the part of the purchase under section 55

1. To disclose any value hidden fact that he is aware of that concerns and touches
on the property
2. Pay the full purchase price at completion and only retain the portion of the
purchase price for purpose of discharging any encumbrance that hasnt been
discharged by the vendor.
If it is an open contract and you are aware that the property is more valuable than you
are buying it for then it is apparent that the vendor can come and have the contract
avoided or rescinded, this defeats all reasons that touch on ownership. When you own
property you are the owner of everything in it.

These conditions are not there under the RLA, the RLA doesnt avail such rights as a
purchaser or vendor, but the law society of Kenya has prepared a detailed conditions of
sale which incorporated section 54 and 55 of the ITPA, and therefore you dont refer to
ITPA in RLA.

As a conveyancer you are acting for the vendor it is up to you to prepare the sale
agreement. Send it to the purchasers advocate with the words draft on it, when he has
approved of it then you can prepare the endorsement, the preparation of the legal
document for execution. It is then engrossed.
In any sale agreement the following are essential: -
 1. Details of the parties
2. Particulars of sale particulars of the contract where you will have description of
the legal and physical description of the property which entails the acreage of
the property and the extent thereof with reference to plants, the legal description
of the property of the interest that is to be sold. It may also carry with it
encumbrances which are interests for that matter Identification of the property
Fixtures and fittings, if there are particular fittings and fixtures sold differently. A
fitting is that which isnt permanently affixed or annexed to the land and a fixture
depending on the extent of annexation can be deemed as part of the land. When
doing particulars of sale you must distinguish them because fittings dont attract
stamp duty. This shouldnt be used to evade stamp duty as if this is discovered
can render the contract void. One of the reasons the central bank couldnt sell
the property is that they could sell the land but they couldnt sell the fittings. It is
advisable when selling the land with trees there is no point of counting all the
trees but when it comes to the sale of residential property there must be caution
because a fireplace could be a fitting. The test is very objective and it is for the
court to determine. Fridges have been held to be fittings! There is case law on
this. When doing the searches do a search on all these and find out if they are
subject to any encumbrance. Fittings and fixtures dont constitute part and parcel
of the land. You shouldnt bother with the natural ones. Consideration the value
of the fittings must be indicated. This is what creates many agreements. Any
agreements tainted with illegality and you are avoiding stamp duty for instance
or defraud the bank will not be enforced and therefore it is important to put the
correct consideration. Particulars of sale are what specifically bind the vendor and
the purchaser.
3. Special conditions are generally terms or covenants or conditions that are
specific to any particular contract and therefore the parties will always modify
section 55 of the ITPA and the agreement will have its own provisions. They are
now varied to fit the specific agreement before you. Special conditions apply to
specific contracts unless the contrary is stated. Examples of this the consent must
be obtained by the vendor obtained by the purchaser stamp duty is provided for
by the purchaser and you could provide that it be part of the purchase price. The
general conditions state that completion is 42 days after execution and you could
provide that it will take 90 days or 6 months especially when the property is
being developed
4. General conditions apply to the sale of land contracts unless the contrary is
stated. Most of the general conditions came from implied terms by courts which
have been compiled together into standard conditions like the law society
conditions of 1999 or as legislated in section 54 and 55 of the ITPA. There are a
variety of them and they regulate the right of the parties to receive deposits, to
charge interest, right of forfeiture of the deposit, regulate when possession is to
be granted, regulate also who is to prepare the sale agreement and the actual
assurance of the transfer and it is these you can contract out of.
The law society conditions of sale are about 30 of them.

The doctrine of annexation is the test on how to establish what is a fitting or a fixture,
depends on how much it will cost to remove it. The extent of annexation itself is seen as
property whether a chattel. Swimming pools are not really chattels but it could be a
fitting, even 100 ton machinery could be a fitting. Therefore the test is objective but first
consider the doctrine of annexation for what purpose has it been affixed to the property.

There are other dispositions of land, when buying land from developers general
conditions dont touch on them. The basis is actually a building plan which is approved
by the local authority. This is a new concept, because how do you deal payment of
purchase price in instalments? Can the developer say that one is in default?
How are you to pay the purchase price and what happens when there is default. How
this is done must be addressed. There is need to ensure that the instalments are being
used to build that house and you have equity in the house. You must provide for
completion and know when you are likely to complete and the time allowance you are
to be given. If you are acting for the purchaser must you insist on certificate of
completion which comes from the architect and the certificate of occupation comes from
the local authority that state that it is suitable for human habitation?

Purchase of property by way of shares.

A company a private company or cooperative society owns property and you purchase
shares in the company or cooperative society, there is a requirement that an a auditor
must certify the value of the shares and fill out form D for purposes of stamp duty, but
what happens is that auditor states the shares are valueless and at the end of the day
you pay very nominal stamp duty. As a conveyancer you must prepare also a guarantee
by the directors and the shareholders transferring to you, you also conduct due diligence
exercise on the company and know whether there are tax liabilities or any other liabilities
you are not being told about, look at the balance sheet and the asset base of the
company.

Auctions
This is also specialized because mostly it isnt voluntarily conducted. But in the west this
is done by way of valuation of the market and they gauge the value of the properties.
It is conducted in public and the sale effected to the highest bidder at the fall of the
hammer. An auction sale may arise by the sale of mortgagee or chargee or order of the
court by the execution of a valid court decree. Both the ITPA and RLA provide for sale by
mortgagees and chargees the civil procedure rules order XXI deals with executions of
decree of sales through public auction.

Section 3 of the law of contract act dont apply, the auctioneer can sign for both parties,
some buyers have been known not to sign the auction memorandum of the agreement.
The best thing is to advise your client that the auction should be repeated, if the buyer
went away.
In an auction the contract is made when the bid is accepted. The bid itself is the offer
and the auctioneer accepts the offer. Most auction sales and agreements are standard
form contracts you either accept it or you dont. it is dictated by one party and the most
critical thing is to advise client before venturing into it know the standard form contract
because some say the deposit is 25% to be paid at the fall of the hammer and the
balance to be paid within 30 days otherwise they forfeit the 25%. The amount here then
is the balance but it is forfeited to whom? The bank can decide to the take the money
and will not even be put in the mortgors account.
The terms are usually the same and the minimum accepted is certain reserve price which
is part of the purchase price. The one selling must discharge all the encumbrances, the
standard form contract states that whoever purchases pays all the outgoings.
Investigation of title becomes hard because unfortunately auctioneering system dont
allow this and the bank seem to follow suit.
As a conveyancer you may wish to even have it surveyed before purchase. With auction
through the court there is settlement of terms under order XXI have to appear before the
registrar and the court will dictate taking into consideration any interest not just of the
one selling the property prospective purchaser who will bid for the same, the court will
dictate the terms of the contract.

One of the biggest concerns when it comes to auctions is the land control board
consent. If the grant states that you must obtain commissioner of lands consent in cases
of leasehold you must obtain the consents.

LECTURE 8

If consent is not given: -

1. Have it rescinded
2. Appeal to the commissioner of lands because the consent was denied.
3. The consent can be genuinely denied. If a foreigner is purchasing land through
auction, the land control board will not grant consent.

Deposits

There are general provisions which the law society did in 1989, one of them being that
of deposits. This will come in exam.
Under the general provisions in common law it is always deemed that you will pay a
deposit and the deposit constitutes part of the purchase price.
A customary accepted amount has always been 10% of the purchase price and this the
law society of Kenya has acknowledged as the deposit amount and in the definitions it is
stated that a deposit means 10 % of the purchase money excluding the price of
movables, livestock, chattels, fittings and other separate items.

You can vary this by saying that the deposit will be more than 10% or that there will be
no deposit payable in which case you will not be varying deposit but general condition 3
of the law society of Kenya. The condition states that the deposit shall be paid on or
before entering in to a contract.
Under condition 3 of the law society rules, Payment of the deposit is always made to the
advocate of the vendor or the estate agent who has been appointed by the vendor.
You can agree to pay to the financiers or even to the purchasers advocates to hold this,
the non payment of the deposit if the agreement has already been signed leads or an
option to the vendor can lead to a repudiation of the agreement.

This means the nature of the deposit is that

1. It is a fundamental term in any agreement, of you dont pay it goes to the root of the
agreement and the vendor will be able to repudiate.

2. The vendor can also insist on specific performance.

3. Its nature and object is that it is intended to be a security of the completion of the
agreement in which respect it is more than just part of the purchase price. It is a security
of the completion of the agreement, it is a form of guarantee

The vendor is entitled to forfeit that deposit. The action of forfeiture is taking ones
object without compensation.
The deposit also entitles you to a lien over the property but only for the amount of the
deposit and only when it is paid to the vendors agent or it is paid to the vendor himself.
When you make payment of deposit to the vendors advocate he either holds it as a
stakeholder or to hold it as an agent for the vendor.
It is crucial to note this, if you receive it as an agent then it becomes property of the
vendor, the vendor has a proprietary interest in it. If you pay as a stakeholder as per the
general conditions of sale and of L.S.K. then he holds the amount as trustee for both
parties, of the purchaser and the vendor.

If you have proprietary interest in anything then you are entitled to exercise any right
over it. Therefore the advocate can use that amount for example to pay as deposit for
another property or to clear any outgoings without seeking your information. But if he is
holding it as trustee or stakeholder then you must seek permission of the purchaser.

As a stakeholder you hold it in trust for both parties and at the end of the transaction
you part with the amount. If the transactions is completed you pay the amount to the
vendor if the vendor defaults then you return it to the purchaser, if the purchaser is in
default, the vendor is entitled to that amount.

When holding the amount as an agent, then if anything happens for instance you as
advocate become insolvent the money is lost and the vendor looses out. The purchaser
can claim the money in the event there is default or the transaction cannot be
completed because he who nominates an agent bears the consequences. Therefore the
purchaser doesnt need to chase the trustee in bankruptcy. If the vendor is the one who
becomes insolvent and the money has to be recovered and the advocate was holding it
as agent then the money goes to the trustee in bankruptcy of the vendor.

If the amount is being held as stakeholder then he submits the money to the trustee in
bankruptcy because as a bankrupt the transaction cannot continue.
The only right is a lien over the property and the only thing you can do as a purchaser is
place a caveat or a purchasers interest. If there is no deposit paid then he doesnt need
to register such caveats. A sale agreement doesnt give you complete rights over the
property but the deposit. Section 54 of ITPA and section 3 RLA on dispositions. A
registrable interest is registered when a transfer has been effected, but it doesnt include
agreements to lease charge e.t.c. therefore you must make sure that the deposit will be
held as a stakeholder because the money will be available ultimately it cannot disappear
and it also entitles you to some lien.

Deposits in nature are like a guarantee intended to indemnify a party that suffers loss.
Where a purchaser is in breach and the contract cannot be completed the vendor is
entitled to forfeit the deposit and the vendor is then discharged from the obligation
under the contract. Over and above that after exercising forfeiture he can also ask for
damages usually the deposit forfeited can cover the damages but in court today you
must specifically prove damages and if there is forfeiture the damages can be
compensated in one way or another. The vendor can ask for specific performance and
the deposit can form part of the purchase price and for the sale to actually be
completed. The reasoning behind this if someone cannot complete a transaction and is
liable to forfeit then why ask him to complete? This is because some purchasers realize
too late that he has gotten a raw deal and would rather forfeit the 10% than pay the
whole amount for the transaction. The court stated in order to prohibit this then the
vendor can then go to court and ask for specific performance but the burden is on the
vendor to show that the purchaser is able to complete it and the court will not hesitate
to do this.

It is not in all contracts that the right to forfeiture occurs, you can have in the contract
that if the transaction isnt completed then the deposit is to be refunded. Ordinarily it is
amazing that you have to forfeit so much money and the vendor will be able to sell the
property yet he hasnt suffered any loss, the court have hesitate in interfering the
vendors right of forfeiture,

Postal Corporation v. Five ways properties (1997) Vol 1 ALL ER 254 ??

Correct case pf citation (1997) 1All ER 254 Country and Metropolitan Homes Surrey
Ltd. v. Topclaim Ltd.

Where the court allowed a refund of the deposit

Workers trust and Merchant Bank v. Dojap Investments Ltd. (1993) 2 ALL ER 370
Where the court ordered the full amount to be returned.

Even if the court has discretion and stop the vendor from exercising forfeiture

1. If the general conditions state that the deposit will be refunded

2. If the court (as per equity) so orders or the court refuses to grant a purchaser the
remedy of specific performance as against the vendor but also as against the
purchaser.
3. Where there is default on the part of the vendor

The reason why the deposit is there is like an earnest to ensure completion of the
contract. If you go to the bank to borrow money you will be asked how much it is, and
mostly they finance 90% of the amount. But so long as the general conditions state that
the deposit must be there, then the agreement can be executed.

The line courts take now they are hesitant in interfering the vendors right of forfeiture,
the vendor stands to gain because if he sell more you cannot get anything from him but
if he sold it for less then he can claim for damages.

If you compare them with insurance contracts that demand utmost good faith then such
agreement should be exercised the same way.

Completion and transfer

After investigation of title and deposit has been paid the next thing is to complete it.
Section 54 ITPA and 3 RLA you need to obtain a conveyance for that matter register it
after stamping it to get your interest in the land. The vendor also expects his
consideration which is the purchase price. Completion is therefore the process of
exchanging consideration, the vendor completed by giving to the purchaser the land
and a registrable conveyance or transfer document.

The purchaser completes by effecting the balance of the purchase price or the entire
purchase price if deposit hasnt been paid as well as effecting payment of any portions
outgoings. This is then the final settlement of the business.

Outgoings are amounts paid like rates, rents paid by the vendor or any tax applicable in
respect to the land. It depends on when the completion takes place. If it is at the end of
the year then half the time the purchaser will pay. In doing apportionment you take 365
days if the land rent is 365 shillings then you divide this amount into half. You must take
into considerations any incomes. Any incomes on the property will be shared equally.
This happens a lot when possession is with the purchaser then you will have to pay.
You therefore must consider outgoings and incomes. Most vendors arent interested in
apportionment but in the purchase price.

Condition No 7 of the L.S.K. addresses apportionment

The date of completion is critical not because of apportionment but also determines
whether or not the contract will actually be finalized.
The law society conditions of sale unlike the general conditions of sale, prescribe that
the completion date ought to be 42 days after the date of the contract where no date
has been expressly agreed, or if it is a transaction that needs consent, then it is 42 days
after obtaining the L.C.B consent.
The general conditions talk of a reasonable date in future; most transactions have the
law society conditions.
The date however can be agreed by the parties. Most lawyers today have adopted a 90
day date after the contract. The reason the period is given in between is because of
requisitions, the searches you want to conduct and the consents needed to be obtained.

Many times when an estate agent is involved they have obtained all the consents done
all the searches and the transaction can be completed on the same day.
As a conveyancer you must decided what the reasonable period should be to be put in
the contract, if you are acting for the vendor you shouldnt think it will be completed in
90 days if the conveyance involves a high rise block of flats.
There is no limit and no harm in having an agreement in finalizing it in 5 years, especially
in instances where a high rise block of flats is involved.

The completion date can be extended out of unforeseen circumstances, for instance an
environmental issue raised by NEMA.

You are allowed to contract out of the general conditions and the quasi conditions of
the LSK. When acting for the vendor obligation is really on you and extending contracts
can be tricky section 55 of the ITPA you are under an obligation to take reasonable care
of the property, the LSK also addresses this, but many times lawyers state that the LSK
conditions will apply in that the property must be insured.

If you are in between date of contract and completion date, it is crucial to use this time
to satisfy your contractual obligations. During this period you may ask where the risk of
the property will lie? What will happen if anything happens to the property?
in land unlike sale of goods you cannot deliver land like goods, where property and risk
passes. Once the transaction is executed once a deposit is made then the vendor holds it
in trust for the purchaser of the estate that has been sold and he himself becomes the
owner of the purchase price. The vendor as a trustee has a personal and substantial
interest which he must protect if he is to obtain purchase price. He mustnt give property
by name only but he must reasonably take care of the property of which he has sold. But
there is no duty to improve it but it must not go to court, the purchaser in such a case
where the property is wasted he can rescind it or he can complete it and sue the vendor
for damages for not exercising the right as a trustee.

What the LSK conditions state is that the property should be insured as it could go to
waste. Condition 23 demands that you take out an insurance as a vendor.
The LSK conditions are strange because if the property is damaged then the purchaser
can complete and claim damages or the purchaser can simply rescind it but is not in
case entitled to any compensation for any loss that he may have incurred, and no refund.
But if the property is insured the purchaser cannot rescind the agreement even if the
property is totally wasted. This is strange because if the property was to be charged then
what happens? Or what if the insurance cover is so inadequate?
In a way these arent very good conditions and therefore as a conveyancer you must take
this into considerations, in that you allow one to rescind the agreement but lay a bigger
obligation on the vendor to take care of the property.

Completion date may be extended to even five years depending on ones patience. If
completion period is provided for and expressed in the contract that time is of the
essence then there is no room for extension, unless the parties come up with another
contract so to speak. This clause more often than not is abused, because time could be
of essence of all the terms in the contract or time could be of the essence only in regard
to completion date. The general conditions of sale and common law when they it comes
to time of the essence means only the completion date. when time is of the essence then
it means time is essential to the agreement and if you leave this to all the terms if a party
is in breach of any of the terms then he who is not in breach is allowed to rescind the
agreement and the party who is at fault after the deadline passes cannot seek specific
performance, even if you are a few minutes late. The other party who isnt at fault can
also seek specific performance of the agreement.
Barclays v. Messenger (1989) 3 ALL ER 492???
Correct case of 3 All ER 492 British and Commonwealth Holdings plc v. Quadrex
Holdings Inc.

In this case the contract provided that if the purchaser failed to pay the balance of the
purchase price on the agreed date agreement would be null and void.
Sir Russell J held that time is of the essence and stated I do not know how making time
of the essence could have been more strongly expressed. It doesnt matter what phrase
you use or the words its all a matter of construction. When taking of time is of the
essence you can have a clause where the parties can agree to do away with the
agreement that time is of the essence.

LECTURE 9

Completion Notice

When time is made of the essence vis a vis completion you must complete on the date
and time. When time is not of the essence completion is within reasonable period of
time or where the date is actually stated it isnt mandatory that you complete on that
date. If the date comes and the parties arent ready then the date could be extended or
the party not ready is given reasonable time to complete the transaction. The party who
is ready gives the other party a completion notice to the party who isnt ready to
complete. Once you give a completion notice then time becomes of the essence. Under
the law society conditions of sale condition 4 notice will make time of the essence and
when the notice isnt headed then the server of the notice is entitled to walk out of the
agreement, however the notice must be an effective notice, a notice which states unless
you perform on a certain date then it will be treated as a repudiation of the contract.
Therefore an effective notice contains: -

1. Limits time for performance. Under law society conditions of sale it is 21 days of
the minimum
2. The notice also demands performance of the breached term and if possible state
it. If the vendor is not availing the consent to transfer
3. You must be explicit in the notice that you will rescind the agreement at the
expiry of the notice period. You must nor give room that you can give more time,
it will not make the agreement time specific and time is of the essence.
4. You must also be specific that you are in a position to perform your part of the
bargain if you are the purchaser you must not create doubt that you cant raise
the purchase price and the vendor must show that he/she is able to perform.
Once time is made of the essence it operates against you as well even you served
the notice, it cuts both ways, the vendor who serves it must be in a position to
complete, must be willing ready and able to complete. The vendor must be in a
position to deliver a good title, vacant possession if part of the bargain and he
must be in a position to deliver the property after he has taken good care of it as
 part of his duty. if you are buying property and are being financed by because of
the vendor you arent able to complete on time and the financiers go ahead and
cancel the mortgage facility then there will be no need to serve the notice. If on
the 21st day the vendor gives you vacant possession and you dont have the
money to pay then he can rescind it. In other words never prematurely serve a
notice. If you serve by post then it starts working from the 4th working day after
postage.

On the completion date and time, the vendor who is ready, able and willing to complete
will prompt the purchaser, the purchaser should be ready with the money or by a
professional undertaking from the financiers directly of the purchasers financiers
advocates or the purchasers advocates. On the other hand the vendor must be ready on
completion date to give possession avail completion documents and also give a duly
acceptable purchase deed as this gives the interest in the property.

Vacant possession isnt strictly speaking vacant possession. Jeremy Bentham and the
other scholars on ownership agreed that law is law and possession means de facto
control. Unlimited access to that property is de facto control but you arent just talking
of possession but vacant possession, there shouldnt be any physical impediment to that
de facto control which is controlled by law.

2. That property should be free from any form of occupation; this is in regard to human
beings and animals. You must ensure that you clear the whole place of belongings
including rubbish for it to be vacant. If there are tenants they must be served with notice,
if those conditions arent met then there is no vacant possession.

If you are served with notice to complete and there are tenants then you arent ready
and willing.

2. The vendor also delivers the executed, general title deeds and that particular time the
purchaser is allowed before he hands over the cheque to examine the completion
documents, if the document isnt genuine then there is no completion.

Prior to completion you conduct a pre completion search to confirm that you are able to
register the documents. Then you deliver the cheque and if the purchase price was being
secured by mortgage then a professional undertaking will be required.

If the vendors advocates examines the undertaking and see that it is good then you still
have to make sure it is proper and perfect. If the undertaking comes form the bank and
that they will release the money once the documents have been registered. The problem
comes in when the money comes from the financier and the document has been
registered and the financier goes burst and cannot own up to the agreement, then the
natural thing is for the vendor to turn to the purchaser.
All the circumstances of the case have to taken into account, in such a case it can be
rescinded.
It is for this reason that undertakings from banks that you hold the advocate to that
undertaking. You must insist on a collateral undertaking from the advocate, because
undertakings are very personal and the advocate will have to pay maybe from his
professional indemnity cover.
It is rare that completion is done physical; conveyancing protocol in Kenya people do
this through the mail but the law demands that it should be done physically in an office
to exchange documents.
If you are in doubt dont release the cheque to the vendor but to the vendor. Even when
you go for physical completion the vendor goes with the advocate.

The law society conditions of sale also provide for completion through the post. The
difference is that if you are completing transaction through the post the vendors
advocate becomes or acts as the purchasers advocates agent and he is under duty on
you instructions to examine the documents and verify all the completion documents.
This sounds self befitting because you are engaging the advocate to examine the
documents on your behalf as your agent and not even the purchasers agent.
When completing by post before you ask for documents or send the cheque write to the
advocates to confirm that they will undertake to examine certain documents. If the
vendors advocate refuses then you must complete it physically, but this should be
thought out carefully because why wouldnt someone want to do it by post? There
would be something they are hiding.
In practice this rarely happens, you wait for the cheque and before clarification they send
the documents.

The law society conditions of sale on completion number 4 when it is an open contract
there is no time for instance then the completion period must be within reasonable time
which is 42 days from the date of the contract if it isnt a controlled transaction and
doesnt need land control board consent. If it isnt controlled then it is after 42 days,
completions is at the vendors offices or vendors financiers offices or vendors advocates
offices.

You complete by paying money but under law society conditions of sale the money is
paid to the vendors advocate to hold as a stake holder. He holds it as stakeholder till
registration of the conveyance. The law society conditions of sale that were drafted in
1989 didnt contemplate a situation where registration would take more than 7 days but
today it takes very long.
As a vendors advocate holding the money as stakeholder you have to wait 30 days to
confirm, if he hasnt on 30th then you must give notice that registration should be done
in the next 30 days, this notice is optional or you may decided to rescind the control
under law society conditions of sale. But if you give notice then you cannot rescind and
give 7 days notice to purchasers advocate, therefore this is almost 67 days.

The other alternate way of completing transaction but by accepting an undertaking.

Where an undertaking is taken under law society conditions of sale, the vendors
advocate is under no obligation to surrender the documents but is obligated to register
the conveyance. It isnt even the bank lawyers who register the documents, this was
done to make the process speedy and it was susceptible to abuse. The vendors advocate
registers only where the price is against a mortgage facility. The inspection of all the
documents, if the property was subject to an encumbrance there must be shown a
discharge. Completion under LSK is allowed through post, ordinary mail. Under LKS the
2.30 p.m time is there also.
If a contract is subject to LSK conditions then 2.30 will apply. If the vendor advocate isnt
available and time was of the essence the purchase is allowed to rescind the contract.
Read LSK conditions of sale 3 and 4

Transfer

Under section 3RLA 54 ITPA the sale agreement itself doesnt transfer any interest it is
simply executory subject to enforcement. It entitles you to another document. Both the
RLA and ITPA have recognized to pass an interest you must register a document to that
effect. Under RLA there are prescribed forms of transferring or varying interest in
property. Under GLA, LTA there are not prescribed forms as such. Under RTA there are
prescribed forms as well. Under RLA the prescribed forms are mandatory and must be
applied when transferring any interest. Under the RTA it isnt mandatory but you can
adopt them as you deem fit so long as you describe the interest you are divesting
yourself from.
RLA was to make this very simple and easy. The RLA was implanted form law of property
act 1925 that got rid of lengthy documents that made documentation simple and
straight forward. But in effect this has made the whole process actually more
complicated. Under the legal notices that state that you emboss your picture together
with your pin number and also whether you are a citizen. Therefore this goes back to the
indentures of assignment that the Act was trying to avoid.
Under the RTA there is prescribed format that you need to use but this can be varied and
you dont need any ones permission. Under RLA the chief land registrar has to approve
the document and payment of Ksh. 400.

The essentials of obtaining transfer

1. You need to provide some administrative information form the registry where the
document is said to be registered. One feature that doesnt exist in RLA are
recitals which are found RTA and GLA documents. Recitals give the history of the
transaction. The RLA doesnt avail one to provide the recitals though this actually
help.

2. Consideration that you are bound to receive or pay for stamp duty purposes and
general law. Consideration clause must not only state the amount but also
acknowledgment

3. Brief description of the property. It doesnt matter where this is put in the
document in the RLA it is found at the top.

4. Under GLA and RTA there is the implied covenants clause. The register speaks for
itself.

The sale agreement is drafted by vendors advocate but a conveyance is done by the
purchaser or the purchasers advocate. Just like the vendor did with the sale
agreement the purchaser must send the draft for approval by the vendor. the
moment it is approved prepare engrossment and it is the engrossment that is
executed by the parties.
When acting for the vendor and the draft is sent to you when it is RLA look out for
the title number, the purchaser may identify the next property that he thought was
better, and secondly verify the consideration clause because of the evasion of stamp
duty. as a vendor if you help the purchaser save on stamp duty then you are party to
evasion and are a party to an illegality and it would be difficult to enforce if anything
goes wrong. Always protect the interest of you client, if it is RTA or GLA ensure that
you client isnt held on any particular covenant.

There are certain documents for transfer that arent prepared by the purchaser for
instance sub leases they are prepared by the vendors advocate. The LSK conditions
of sale condition 24 is explicit on who should prepare the conveyance or transfer.
As a conveyancer acting for purchaser you should point out the LSK conditions which
arent varied and state that you prepare the document

Under RLA the forms that are used form RL1 is for purposes of transferring land, land
which is freehold
RL2 used for purposes of transferring leashold
RL3 used by chagor to a bank used to transfer an interest or charge
RL4 is a transfer by chargee (BanK) sales
RL5 transfer of profit
RL6 transfer of an undivided share

Under RTA and GLA there are documents that arent lengthy because of the law of
contract act section 4
Try and ensure that the documents are signed by both parties

The RTA unlike the RLA the RTA describes the property you are transferring and use
the right document for registration. Under GLA there is a distinction if you are
transferring property which is a freehold then you prepare a conveyance if property
is leasehold then you prepare an assignment, the only difference in a conveyance
you are divesting yourself of everything, but assignment there is someone entitled to
the reversion. An assignment is a transfer or setting over of property or some right or
interest in the property from one person to another.
An assignment is always an assignment absolute it leaves the assignor no interest in
the assigned property and it is for a fixed value of consideration. To draw a proper
assignment is for the mesne.

Conveyances also denote a transfer of a property but applies to freehold, it is the

operative clause that helps you distinguish them, in a conveyance it reads the vendor
hereby grants and conveys whereby in an assignment the assignor hereby assigns

Previously conveyance were known as indentures this was the period before 1925,
the documents would be indented and one cut in a zig zag right in the middle in an
indented form and if there was a dispute they could be put together to show that
they were one.

There are fatal mistakes and mistakes that can be corrected, you shouldnt be
worried about transfers in an exam because you will do so many of them in practice!
Today with IT documents tend to look different, you shouldnt insist on a particular
format that was used in 1950s as long as they have the very crucial elements

There are modes of transfer, people voluntary or by courts. Some transactions dont
need deeds even if they are under
 Here you find vesting orders and assents.
Vesting orders are orders by the court for the purposes of conveying or creating a
legal interest or estate and they operate to vest the estate in the same manner as if it
had been conveyance, transfer or an assignment executed by the estate owner.
It is actually executed by the judge who makes the order, the magistrate courts dont
have jurisdiction, the jurisdictions is found in the trustees act section 45 instances
when they are made
1. When the court orders the purchase and the sale of land section 48
2. When the court orders the sale of a purchase of land or a mortgage to be
created. It is up to the one seeking the order to bring the case appropriately, it is
done by plaintiff
3. when the court orders for the transfer of land held in trust where the trust has
failed to exercise his duty section 45
4. where an order for specific performance has been made, the court grants such an
order on the part of the vendor, the reason the vendor goes to court is because
he has refused to sign it. Section 49 avails this remedy and it is judge who signs
it.

The essentials of a vesting orders are important to note. The recitals in this instance are
very important and should be clearly noted. There is not mentioned in that section of
adverse possession. Once the court makes the order, then people move the court that
they be registered as owners and proprietors in cases of adverse possession. The right
procedure to seek a declaration to be declared as the owner. Most of the time the
registrars see the court judgment and register the document. This must be accompanied
by an absolute order and not just be court judgment.

There are other modes of transmission of land. Transmission in conveyancing entails 2

things
1. Insolvency
2. Death

In conveyancing transmission is the transfer of land by the operation of the law. Section
125 of the RLA as it were it isnt a voluntary exercise. It will occur in instances of death of
the proprietor or insolvency of the proprietor. But it will also occur in cases of adverse
possession.

In cases of insolvency the trustee in bankruptcy or receiver through a court order will be
the new registered proprietor but in cases o death the law of succession comes into play
and the administrator will be registered as the new proprietor. The administrator can
also if under GLA or RTA transfer directly by way of an assent to the beneficiaries. Under
RLA e must first be registered as owner (proprietor) then administrate it.
The form is RL 19 then transfer it by form RL7.

In the case of death of a joint proprietor no instrument is required in RTA or RLA.

LECTURE 10
Lecture 10
Sub leases
In any particular piece of land you can have various interests. You can sub let or sub
lease any piece of land. When you talk of sub lease it is a transfer and has a title. Because
of the very nature of land and its scarcity and the high demand of residential houses and
homes the western world, the 20th century developed condominium ownership of land
where the high rise developments and homeowners would have title.

With such long term leases they were deemed as title. Someone would put up a high
rise block the lease itself would operate as a transfer and title. In Kenya it wasnt until 30
years ago, with the high demand of residential areas as an attribute to migration many
people wanted to own homes, the only was to develop a system to develop
condominium system in the 70s. some of the banks till date were resisting this, because
most banks couldnt see how you could mortgage or charge a sub lease. The grant you
get from the government is in fact a lease. There are conditions such as its 99 years
subject to an annual amount to be paid, there are covenants. A sub lease was meant to
operate like a lease and a title and therefore the sub lease would be registered in the
land registered. But banks refused to recognize it as title, banks thought that the owners
didnt have control over the reversion.
Even if this was resolved by giving a covenant whereby if you obtain extension then
youd automatically obtain an extension. But this again created problems because
extension became uncertain. Therefore there was a big resistance from financiers and
what happened to curb this was to come up with a concept where a management
company to be formed by apartment owners. Therefore the reversion was taken care of
by a management company registered like any company with sole objects of managing
the head parcel itself and not the individual flats itself. It would actually own the
reversion,. The lessor would give sub leases then the lessor also transfers the reversion or
remainder of the term to the management company then the apartment owners would
own the managements company. If there are 12 flats then each owner would own 1
share of the total shares. This was of great comfort to the bank owners because you
would have 1/12 of the share.
When buying the procedure is the same, the only thing in addition to searches is that
you investigate the sub lease you are buying but also investigate the head title itself. As
indicated there are banks that arent comfortable with this and in 1987 the government
came up with the Sectional Properties Act, of 1987, which was intended to create
individual titles or apartments and flats divided in another abstract manner and the
subdivision registered and each apartment given a title under sectional properties act.
This is the same thin like a sub lease.
Under the Act, the substantive law applicable is the RLA Cap 300. if any property is
registered under GLA or RTA then you must convert it.

The act provides for the division into section either commonly owned or individually
owned. Therefore any high arise building there are sections of the property owned by
the apartment owners then others by individual owners.

It also provides and entails the registration of leases and other interests in respect to
such individual units or jointly owned property the common areas.

Sectional Properties Act also entails the control of certain incidents attaching to
ownership or joint ownership of the property. The main features of this act are
 1. The substantive law applicable is the RLA
2. It provides for the creation of a body corporate similar to a company registered
under the companies act, except that the creation of such a body corporate
becomes automatic once a building is brought under the sectional properties act.
When you bring it under the act then a company is incorporate but you dont
have to go through the rigours of stamp duty.

How do you create Sectional Property?

You do this by preparing a sectional plan done by a surveyor and upon approval of the
sectional plan by the local authority where it is situate it is registered by the registrar of
lands and not of titles. Under section 4 of the act, the plan must describe two ore more
units and one signed by the proprietor and approved by the local authority. It must
delineate the boundary of each individual unit; it must also reveal the approximate floor
area of each unit.

What this Act was trying to do was create land in the air!
Upon registration the place the register of that original piece of land is closed and a
separate register is opened for each unit which will contain a description of that unit, the
share apportioned of the owner of that unit and any other encumbrance attached to that
unit or originally attached to that parcel of land.

Each unit will then be issued a certificate of sectional property. In the case of ordinary
land then you get a certificate of land. And the title is as good as any title.
The reason of the shares is because the company formed. The name of the company is
usually The owners sectional land number, the number is usually the registered number
of the sectional plan. Because of the automatic registration it is given straight away.
What guides you is the by laws the shareholders draw on how to run the estate.

Under the Act the company must insure the company and pay premium for such
insurance. The owners must keep the property in a good state of repair, the company
must hold meetings for its members, the company must ensure that all the covenants of
the unit owners of the lessees are complied with. The company is enjoined to enforce
any covenants. One of the covenants is contributions for upkeep of the property.

Problem with Kenyan Acts such as the Arbitration Act are picked from other jurisdictions.

Who controls the sectional property company?

It is the institutional manager who must be a lawyer or an accountant.
The statutory requirement is that the institutional manager must be an advocate or an
accountant but they pick on accountants. NSSF Embakassi is well managed and
successful while NHC Kibera is a complete failure and disaster. This maybe because of
the tenant purchase system that could be attributed to its success.

Termination of sectional property

Only the court or the members if the members unanimously resolve to terminate it, then
the court can make an order. if you are a minority shareholder and you use the
companies act the court out of benevolence may terminate it. But what happens next? If
terminated then all of then are terminated and the register is closed.
Note that under the Act, the title is the certificate of sectional property and it contains
basically the same details that any title under the RLA would contain. If it is a freehold
that has been converted then it will be a title deed, if a lease hold then certificate of
lease. If sub lease then the title is the lease itself usually accompanied by share certificate
of ownership of the shares in the company registered under the companies act. Under
the Act the company isnt registered under companies act

If you come across sub leases then always look at the premium consideration clause and
confirm is registered and proper stamp duty was paid. If it is in favour of our client
ensure that proper consideration has been stated.
Look at the reversionary interest clause and this must always be drawn be in favour of
the management company.

The next is on the management company, ensure that is registered ask fro memorandum
and articles of association of the company. Look at the consent clause, where the lessor
will not charge, transfer or assign without consent.
Look at the users clause how the property is to be used, for instance only vegetarians
can use the vegetarians can use the property or only progenitors are allowed to use the
property.

The Act came into force on 1 st April 1990, the LSK conditions were last revised in 1989.
therefore be careful where you can be caught up in the muddle. Compare and contrast
the conditions of sale, is there any thing that will interfere when selling the lease in that
the person who only draws it is the purchasers advocate yet the sectional Act states its
the vendors advocate. Avoid such embarrassments.

When you look at GLA and RLA there are implied conditions, would they automatically
apply to the lease or a sub lease drawn by the same Act. Look at it as to what would
happened in such a case. The rules in the Act are many please read them.

Mortgages and Charges

Most people dont have the money developers ask for or security. When you approach a
financier they use the property you are buying which would serve as good security.
Some also insist on an assignment of income and profits in your property.

Mortgage in the form of a document created against a parcel of land and the interest
thereon for purposes of securing monetary advances from anybody (Individual, friend, or
wife) the nature of the advance could take any form. In the ITPA they are talking about
money but today it is being extended.
Under the ITPA we talk of mortgages, and you will find the definition at section 58 (a) of
the ITPA it is defined as the transfer of an interest in specific immovable property for the
purpose of securing a payment of money advanced or to be advanced by way of loan.

There are also equitable mortgages

Where you dont transfer your interest but you simply deposit the title document to the
specific immovable property for securing the money advanced by way of a loan.
Alongside mortgages we also have charges, in legal charges under RTA, RLA and ITA you
dont transfer your interest in the land, you give your land as security but there is not
transfer of the land. Under the RLA there are no equitable charges but the reasoning is
that the RLA title, is not conclusive evidence of the interest in the parcel of land or title
itself. When you look at the history of our land law, if the reasoning is that the
conclusively is in the register and therefore you arent supposed to deposit title what
stops you from conducting a search that guarantees that what the chargor is depositing
is good, therefore such as reason isnt good enough.

Mortgages are found under ITPA and the interest is transferred but it is the transfer that
is aligned to the recovery of the debt. The purpose of the mortgatge is to secure
repayment of the debt and the reason the interest is transferred is to ensure the money
is repaid. The mortgagero retains the reversion and motgagee becomes the lesee of the
period of the loan. You give the property and the interest and if you pay then you
become that person lesee. Both parties have legal interest in the property. In UK there is
only legal charge and Kenya is headed there. The RLA demand that all these should be
converted but finally we arent to have mrotgage. In 2002 they have gotten rid of
mortgages but legal charges. And we are heading there.

Charges
It will be created under RLA, RTA and to a great extent section 100 of the ITPA allows it.
Section 100 allows registration of legal charges but this rarely happens as you end up
with mortgages.
When you look at section 65 (4) of the RLA it is very clear that in the event that you
create a legal charge under the RLA you arent transferring any interest what you are
simply doing is you are charging. Therefore if you are charging your property then that
person has an interest and therefore it isnt a clear. But the distinction is that whereas a
charge only gives right to payment of a particular fund or property without transferring
that property, a mortgage is in a sense a transfer of an interest in the specific immovable
property. Therefore a mortgage jus in rem (a right against a thing) and will be good
against any subsequent tranferees

This takes us back to the basics, because it is the right against the property itself how will
you transfer a right in your property if not signed by both parties. Cap 23. always ensure
that both parties should sign.

These are limited in form. Mortgages are of various kinds and the reason why is because
of the interest that is being transferred as a licensee is infractuary interest. Under section
58 we have simple mortgages and you will also find mortgage by conditional sale and
usufractuary mortgages.
The English Mortgage which is most common, the mortgagor bind himself to pay the
loan and in default the property can be sold.

Mortgage by conditional sale, there is transfer of property as if it is a sale as it is

conditional in securing the debt. If he doesnt pay the money then the conditional sale
becomes absolute.

The usufracturay entails actual delivery of the property. This involves not just the
creation of the interest but actual delivery of possession of the property. Here you keep
it till the day I pay you. It is like a transfer, almost like conditional sale mortgage, just
that the in the condition sale one there is nor transfer of possession.
In usufractuary there is not time limit. The most common which is the English mortgage
this is the most common one. The mortgagor binds himself to pay the money on a
certain date (redemption date) and conveys the mortgage property absolutely to the
mortgagee subject to a proviso that the mortgagee will re transfer it to the mortgagor
upon payment of the mortgage money. You therefore find in the documents that the
mortgagor hereby conveys

Section 98 of the ITPA there is the Anomolous mortgage where it is none of the
mortgages above. It could have characteristics of the mortgages and it could also be
hybrid of the mortgages or under Islamic Law taking of interest or payment of interest
isnt allowed. In the Islamic banks they provide Islamic mortages. What happens is that it
is purchased but you dont pay any interest but you pay the money, then after payment
the bank transfer it. It is in the banks name but it isnt the banks proerty.

There could be a charge by operation of the law. Income tax could create a charge
against judgment debtor. This is the tax mans charge.

Securitization and completion of mortgages and charges

The process starts by an application of the borrower to the bank. This is done through a
standard form. This is done through due diligence process which may or may not
involves you as a lawyer. The bank conducts a credit assessment of the borrower. In the
standard form application the borrower authorizes this assessment and the bank really
investigates as they go to the lawyer and the police station.
Another due diligence is the valuation of the property especially if it is a mortgage.
There is an offer letter. After this you as a lawyer become involved in drafting the
security document.

For security of the document you require:

1. Details of the parties, proper names and address, it may look simple but you will
realize that this is very critical especially when sending the statutory notice then
your client will be the loser.
2. The loan amount, the amount that is to be secured from the document. This
amounts could potentially be different. This has cause problems because you
may be lent 200 million and the property is valued at 20 million and you pay 30
million. There must be a continuing security clause as it will cover the balance. Is
it has such a clause then the property continues to be a security and cannot be
redeemed.
3. Repayment period
4. Proper interest rate or whether or not interest is payable. This may not be very
critical but when taking of remedies it becomes important
5. repayment mode
6. Particulars to be charged or mortgaged. Preferably get the tile and get the
correct tiles. So that you arent using a defective document.
7. The nature of the security to be created. Get proper instructions from your client
as to what is being created. Is it collateral or supplementary to the main security
which is the debenture, is it a legal charge?

Duties of the Advocate (Lender)

When acting for the lender conduct a search, get the title documents and put in some
requisitions.
Advise the lender to inspect and value the property if they havent done so
Confirm the capacity of the party creating the mortgage or charge if the party is a minor
advise the parties as appropriate. If the party is a trustee advise the client as appropriate.
The trustees are limited as they may create charges but they cant create mortgages.

When talking of capacity, if it is a company, look at the memorandum and articles. Under
the insurance act, the insurance cannot create mortgage or charges on the life fund.
If the party doesnt have capacity it can be created as null and void. For companies if
there is no authority there will be a problem.
After ascertaining capacity, draw the mortgage and send the draft to be confirmed. On
return after confirmation engross and send the document for execution. Execution by
both mortgor and mortagee, chargor and chargee.

At the execution stage, Barclays Bank v. Obrien?, advise client the effect of the
document. Always attest to the document personally as an advocate and not your
offices.
If transferring property the person getting the interest you dont have to attest in your
property but the one giving away the property always ensure that you are there.

On the part of the borrowers advocate you may be required to

-obtain consent and secondly send the title document to the banks lawyers. As you send
the document ensure that you send it on the undertaking solely to create the charge or
mortgage, only for the purposes intended.
Thirdly you need to approve the mortgage alongside the facility.
Obtain all the adequate funds for stamping and registration.
The process is the same when it comes to further mortgage or further charge.
What is the difference between second and further charge or mortgage?
LECTURE 11
Disadvantages of a second charge
A second chargee does not hold title documents.
Power of disposing property is exercised to his exclusion. The first charge can sell the
property. The first chargee ranks first in property over the second.

In order to remedy this settle for a lenders agreement between the 1st and 2nd chargee
to take care of issues ass to how to dispose of the sale proceeds.

Important covenants to the mortgage/charge

1) Ensure client has a good security; the charge document complies with all legal
requirements as to writing. It has to comply with RTA, RLA, and ITPA
Cap 23 Law of Contract Act
Attestation RTA
Verification RLA

RLA section 65 (1) Charge ought to be in a prescribed form.

Section 108 RLA allows one to vary the charge document as appropriate.
The RLA demands the chargor to sign a certificate that he understands the effect of
section 74 of the RLA.
It ought to contain a certificate that the chargor understands the effects of such
remedy.
This in the RLA is not fatal.
Ngeny v. Kenya Commercial Finance Limited ( 2002) 1 KLR.???
Kenya Commercial Finance Company Ltd. v. Ngeny & Another [2002] 1 KLR 106
The court held that the lack of a certificate signed by an advocate did not void the
chargees right to sell the property or in any event the charge itself.
Under ITPA & RTA the Act is explicit and if you do not include such a certificate the
charge will be void.
There are charges created under section 100 of the ITPA. ITPA substantial law to RLA
and RTA talks about charges alongside mortgages. Lack of a certificate does not void
an RTA charge.

La Belle International Limited v. Fidelity Commercial Bank (2003) 2 EA 541

In this case the court held that there is no need when creating a charge to comply
with requirements of ITPA as to certificate by the chargor and advocate. Section 69
of the ITPA was understood by the chargor.

In this case a husband and wife guaranteed their company with their own personal
property against the respondents bank and the company defaulted.
Execution was witnessed by one advocate, the certification by husband and wife was
witnessed by another advocate. The husband and wife argued that the bank had no
authority to exercise their statutory power of sale since it was defective.

Nyamu J asserted that for RTA charges in particular, a defective or even lack of a
certificate would not affect the statutory power of sale of the bank.

Crucial Covenants of an Ordinary Charge

What matters is whom you are acting for.

1. Proper description of parties and their addresses. This is crucial because one may
not be able to enforce the charge against the parties if the description us wrong.
The address is important because if its wrong one may not be able to enforce
the remedies.
i.e. where do you send the statutory notice?

In the case of Simiyu v. HFCK Ltd. [2001] 2 EA 540

In this case the Plaintiff charged her property under the RLA and showed the address
in the charge document never was that her address and neither gave evidence of her
right address.
The defendants were barred from enforcing the statutory power of sale even though
it was a proper notice because it wasnt properly sent to the right address.

2. The Covenant to Repay

The first testatum. It is a covenant to pay both loan and interest. Always includes a
redemption date. Its wording is important; should be as direct as possible.

3. Covenant to keep the property in good repair and condition

For the good of both parties i.e. the chargor would like to redeem good property.
e.g. must be insured, right of chargee to enter and inspect, the chargor to pay rent
and rates, no alterations without the consent of the chargee/mortgagee, no transfer
or lease of the property and that the property shouldnt be given as securing for
another loan to another party.

4. The charging clause

GLA mortgage Convey it if it is freehold
Assign it if it is leasehold
 RTA or RLA - charge it
Include all improvements thereon including fixtures and fittings.
Equip Agencies v. Credit Bank Ltd [2004] 2 EA 61
The charging clause didnt include chattels fixtures and fittings.

The High Court Held

In the absence of such a clause or supplemental chattels, charge or mortgage, the
bank can only sell the land.

5. Redemption Clause
All borrowers have an inalienable right to redeem the property this a chargee is
obligated to discharge, re-convey or re-design the property once the chargee has
paid.

When is this right clogged?

It is a question of fact e.g. an insertion in the document or though the conduct of the
chargee.
One cant contract out of this right e.g. the right of chargee to purchase the property
or conversion of the charge to a sale. A restraint on the owner to redeem is also
illegal.
If its not in the charge document that one would still redeem the property.

Expiration of the right to redeem

a) Once the lender sells the property correctly

b) ITPA once the agreement has been signed by the lender and a 3 rd Party.

c) RLA section 77 when the property is actually transferred. Other instances

include when in the charge/mortgage document the lender is permitted to
consolidate, then when one expires the other also does. Another instance also if a
foreclosure order is made for ITPA properties can this be extinguished by the
doctrine of laches?

Mortgagor/ Chargors Remedy

1. Equity of redemption Through the court

2. Damages
(Think of others)

Remedies of a Chargee
1. Statutory Power of Sale
Section 69A ITPA
arises only after mortgagor/chargor is in default of an appropriate valid statutory
notice is served upon him, which notice is not needed.

Upon default it occurs when

i) The mortgage debt or part thereof is not paid 3 months after receipt of a
notice to pay.

Before 2002, it had been any day after the redemption date
 Refer to Russell Co Ltd. v. Commercial Bank of Africa

In 2002 in the case of Eros Chemist Ltd. v. Trust Bank Ltd. [2002] 2 EA 550. the Appeal
Court held that
a) The notice must state that at the end of 3 months after service of notice, the
bank will have the right to sell the property.

b) The notice must state the property will be sold

c) The notice must be served

If there is no notice or there is a defective notice and the lender sells the property, the
purchasers title may be impeached.
Under ITPA the innocent purchasers title cant be impeached.

ii) Where the interest is in arrears and for 2 months it has not been paid.
A statutory notice purporting to be in exercise the right to sell for such interest is
defective.

iii) Breach of any covenant amounts to default. The right to sell is exercisable
automatically. There is no need to issue a statutory notice.

Even if further instalments are made after the statutory notice is issued, the statutory
notice is still valid unless expressly abandoned.

Modes of sale
1. By normal auction
2. by private treaty

A mortgagee has the right to choose.

Maranga v. National Bank of Kenya [1995-98] 1 EA 177

It was held that the choice is the chargees/mortgagees
The argument was that the sale was invalid as the defendant had advertised the sale by
auction and not by private treaty, it was eventually sold by private treaty.

The appellants contention was upheld in the High court. The appellant appealed to the
quantum of damages given in the High Court. The respondent cross appealed.

The court of appeals asserted that there is no estoppel to a statutory right i.e. the ACT
ITPA permits the lender to sell by either public auction or by private treaty. Thus the sale
was proper and ordered that the appellant wasnt entitled to any damages.

Any sale must be exercised in good faith

Sajabi v. Amreliwalla [1956] EACA 71

The Court of Appeal held that the mortgagor is not a trustee of the mortgagee but must
exercise in good faith.

How are the proceeds of the sale to be used?

 1. Clear all prior encumbrances
2. Clear any expenses incurred during the sale
3. Clear the mortgage debt
4. Clear further encumbrances
5. Pass the balance to mortgagee

2. Appointment of Receiver

This right is exercisable only

a) When one is in default
b) Breach of a covenant
c) The statutory power of sale has arisen

The receiver is an agent of the mortgagor and therefore not liable for his action. He is
enjoined to act responsibly though.

3. Foreclosure
The mortgagees right to obtain a court decree barring a mortgagor from ever
redeeming the property.

4. Right to sue on the covenant to repay

Under ITPA section 68. One can only commence with the suit after the sale to enable
the mortgagee to recover the balance not obtained in the sale.
This remedy is also available when the property is destroyed especially out of the
acts of the mortgagors. See section 66

Is this a contractual right or a land law right?

Seemingly its a personal covenant, thus contractual.

If its a personal covenant, can you sue a transferee of a charge or mortgage? The
answer here seems to be yes.

..personal representatives and assigns where the context so admits.

Adding the phrase where the context so admits is not always prudent as it creates a
loophole.

5. Right to take possession

Under RLA
Securities thereunder only avail 3 remedies

i) The documents must have been properly, the chargor must have defaulted
for 1 month in payment of the principle or interest in performance of the
express or implied agreement; and payment has not been paid or the
agreement has not been performed 3 months after receipt of the statutory
power of sale.

For agricultural land, one must send notice to the District Commissioner. Non service of
this notice means the subsequent sale would be void.

In the case of Ochieng v. Ochieng [1995 98] 2 EA 260

The bank was unable to prove service. The court of appeal held that the sale was void.

Under RLA good faith must be exercised. The sale is usually by public auction unless
prescribed otherwise.

ii) Appointment of receiver under section 74

Notice of appointment must be issued before the receiver is appointed.

iii) The right to sue on personal covenant.

One need not sell the property then sue for the deficit

Section 80 expunged the right of foreclosure and possession.

In the case of Aberdare investments Ltd. v. HFCK [1999] 2 EA

In this case the applicant charged property to the respondent and defaulted. The
respondents issued a statutory power of sale. The applicant argued the respondent
LECTURE 12

Leases

Section 3 RLA and section 5 ITPA.

Section 3 states that a lease is a grant with or without consideration by the proprietor.

Section 5 of the ITPA states that a lease is a transfer of a right to enjoy such property
made for such time
A lease is said to exist where an occupier is granted exclusive possession of property for
a fixed term or periodic terms in consideration for premiums or periodic payments.
Street v. Mountford [1985] 2 All ER 289

Essentials of a lease
There must be quiet possession for a term certain or for periodic instances and on
various terms which include a price being paid for that exclusive possession or a
premium for that matter.

The RLA puts more emphasis on the grant and exclusive causation but doesnt insist on
consideration while the ITPA is strict and straight on consideration.

In 1985, remember we had long term leases, we didnt have periodic payments or
consideration in the form of rents. Under a sub lease you dont expect a rental but you
pay at once.
When you talk if exclusive possession, the tenant (occupier) can exclude everybody
including the landlord or the lessor from the premises once they are granted to him.
The tenant must have powers the landlord that he cannot come in a particular moment
or eject the landlord if trespassing.
Where the landlord retains some control over the premises then you may not be talking
of exclave possession as it is a matter of construing the arrangement.

Antoniodes v. Millers (1988) 3 Weekly law reports 1205

In this case the landlord and the tenant shared a one bedroom flat and they were both
paying rent equally (It was like a sub tenancy) it was held that the plaintiff was not a
landlord in the strict sense of the word as both of them held exclusive possession.

Therefore what matters is the construction of the arrangement and what is on the
premises.
In the case of Street v. Mountford stated that once exclusive possession was
established then there was a lease. Mrs M entered into a licence agreement with S which
prohibited any other person except Mrs M from sleeping in the room without Mr. S
consent. The room was to be kept clean and tidy, no pets no children were allowed. Mrs.
M defaulted in paying the agreed rent and Mr S issued 7 days notice to vacate. The usual
lease covenants had been omitted from this licence arrangement. Mrs M had expressly
acknowledged that the Rent Act Of 1977 did not apply to that arrangement and it
operate as a tenancy but only as a licence.
The court of Appeal in England held that it was a licence but on appeal to the House of
Lords it was held that it was a lease and that the agreement had satisfied requirements
of a lease and it couldnt be altered to be one of a licence. The House of Lords opined
that there was usual covenant agreement and she was paying rent. It isnt enough to
state that something is a licence without looking at the circumstances surrounding the
case.

As a conveyancer you must distinguish any lease agreement from a licence. In the case
of licenses a license is an affirmation by the proprietor of land which allows the licensee
to do some act in relation to the land which would otherwise be a trespass. the
difference is that there is no exclusive possession in the case of a license. If the interest is
created and transferred then it cannot be a license but a lease. If permission to use land
without exclusive possession then that is a license. The issue of price and rent doesnt
matter. A licence doesnt include an easement in this respect. As a conveyancer gather
the intention of the parties by
a) reading through the entire document,
b) By finding what is on the ground as was the holding in Street v. Mountford
c) By taking proper and appropriate instructions from the client.

There are difficult instances where you are given a parking bay to park your car but since
it is brand new you go to the extent of building a shade, is this exclusive possession? If
from your pay cheque they deduct parking fees would that entitle you to exclusive
possession?
You must consider all the three conditions above. If you expect it to be a licence but on
the ground it is lease. What may appear to be a licence may be a lease.

This is important for two reasons: -

a) Because of the regimes of the Rent Act Cap 296, Cap 301, the landlord and
tenant ( shops, hotels and establishment) Act
Both Acts were protecting the tenant who was the weaker party. However because of
the many restrictions for instance varying controlled tenancies this because difficult.

b) Leases can be assigned but licenses cannot be assigned, there reason behind this
is because in the lease you grant and transfer an interest, in a license you are
granted temporary permission to benefit for a limited period, it cannot be
extended to third parties. In licenses of petroleum licenses, the idea is to kick
them out when they feel like, if the one dies is it transferred to a personal
representative, does the privilege move on? It is a personal privilege and
therefore it ceases.

Runda Coffee Estate v. Ujagar Singh (1966) EA 564

It was held that a license is a personal privilege of occupation and not possession
Leases must meet all legal requirements and formalities.
The tenancy must be certain if it is uncertain it will be void. If you give your premises
away until such time I will need it to expand my home this is very uncertain and it will
be void.
If the lease document isnt certain it will be void, the lease document must meet the
requirements under the relevant statutes- the Law of Contract Act as it is a disposition in
land, the document must be in writing and signed by both parties as per the Act.

There are other statutes the RLA from section 53 and the ITPA from section 100 there are
various requirements which the lease must meet.
We said that when the lease doesnt meet the requirements of a statutes especially cap
23, the license is a personal privilege and if the lease doesnt meet the requirements of
the Act and itsnt registered then it becomes a personal contract and isnt a privilege as
such.

There are a number of classes of leases,

A_ Fixed period, where the term is certain
B) Periodic tenancies or periodic leases, these are year to year or month to month. If the
rent is paid every year then it is yearly. Section 106 ITPA, section 46 RLA it allows week to
week tenancies
c) There are tenancies at will, they arise when they are sale agreements and before
completion you give possession, you can terminate at any given time at your will.
d) There are tenancies at sufferance, these exist at any periodic lease if the lease is for 6
years and the tenant stays on then that will be a tenant at sufferance. This can be
construed as a tenancy at will, but the distinction is on the way there are terminated.

Tenancies at will are terminated at will, monthly 15 days notice annually 6 months.
The statutes demand for the interest to be an interest in rem the lease ought to be
registered. Conveyancing isnt complete till registration. Lease under ITPA there is a
requirement that if it is a lease for more than one year then it must be registered while
under the RLA if the term exceeds two years then the lease must also be registered.
Both RTA and RLA prescribe forms to be used by conveyancers in creating leases
however both forms are very limiting because of the many covenants that parties always
agree on and consequently the advocate for the lessor will always re draw the forms.
Under RKA if you have to re draw you have to obtain permission under section 108.
under RTA you can adopt your own document.

Covenants to be included in a lease

Under section 53 55 RLA and section 108 of the ITPA certain covenants have been
outlined to be implied in a lease document or lease arrangement if they havent been
expressly excluded by the parties or by local custom and usage. Under the sections the
lessor or landlord must be deemed to have given the following covenants.
1) That he is competent to create the lease
This is never found as number one in the lease it is always implied and really you
cannot be excluded. Unlike mortgage these are left to the law of contract. But under
leases it is deemed you have competence

2) The lessor covenants to give quiet possession section 53 of the RLA and 108 of
the ITPA. This is pegged to the fact that the tenant must give something in
return, for instance rent, if the landlord is allowed to inspect the premises then
you must honour this. The reasoning is so that the tenant isnt harassed by the
landlord, the landlord is esptopped form disconnecting power and water. It
shouldnt lessen the benefit of the property.
 3) The landlord will not derogate from the grant, this is an extension of covenant to
quiet possession. You have to ensure that what is given by the left is taken by the
right. He shouldnt use the property to its disadvantage. This objective as to what
is derogation, if you let property as a butchery and next door you decide to open
a salon would that amount to derogation of the grant? It is appropriate to know
the tenant that the premises are being used for a particular purpose and you will
not be allowed to use the premises as a salon. The issue of derogation is quite
limiting. But if a sewer plant if opened next door then that is clear derogation

4) The premises under section 53 (d) are fit for human cohabitation. This is only in
the RLA.

5) Covenant to repair the premises, section 53

6) Under the ITPA there is a covenant that the landlord will disclose all the latent
defects of the premises which he knows, by latent they are those defects that you
cannot detect when given the opportunity to inspect the premises.

Covenants of the tenant

There are also implied covenants just like for the landlord if not expressly removed
they are deemed to have been part of the covenant

1) Section 54 of the RLA and section 108 (b) of the ITPA provide for the implied
covenants on the part of the covenant. First is the covenant to pay rent, you pay
rent to use the premises and acquire the interest. Rent is payable when in
possession and it could actually be constructive or actual possession. Rent is
payable on the period of the lease, rent may be suspended if the premises are
destroyed and will be of no use to the tenant

2) Pay the outgoings which include land rent, rates and other taxes due to the
government unless they are payable by the landlord.

3) The Interior is always repaired by the tenant, which shouldnt be construed as

improving the premises, you shouldnt be over improving it.

4) Keep the furniture in good condition especially if it is a dwelling that is leased

with the furniture.

5) Covenant not to transfer, let, charge, mortgage without the consent of the lessor.
If it is along term lease there is a condition that this consent shouldnt be
unreasonably withheld

In drawing these covenants you must draw them on instructions of the client and
you dont need to be oppressive and dont be the judge, jury and executioner at the
same time.

For commercial properties the leases are even more detailed. In commercial properties
there is the issue of service charge which is provided for in taking care of the property.
Some landlords convert the service charge as rent instead of being used as to take care
of the building and use it on the premises.
The ordinary leases state that the buildings will be used for commercial purposes but in
commercial leases, they are used for a very specific purpose.
As a conveyancing what happens if somebody is using the expertise for instance a
medical clinic and decides to conduct abortions in the premises is this a breach of
covenants.

6) In commercial property leases, there is restriction on weights, this isnt only in

industrial leases.

Rents Act Cap 301 and 296

Cap 301, was enacted in 1965 with the intention of assisting tenants who are bound to
become prey to unscrupulous landlord. The protection accorded under that Act is for
commercial premises and not residential. To fall under it the tenancy in question needs
to be

a) In writing
b) Must be for a period not exceeding 5 years, this is a controlled tenancy
c) If it exceeds 5 years must not contain a termination clause, this means it can be
for less years. Therefore it shouldnt contain a termination clause as if it has a
termination clause it can be terminated before 5 years are over therefore it is
controlled.
d) If the premises relate to government premises then the government can decided
any premises to be under the act or any premises of the government decided
that the government premises will be under the ambit of the act and will be
controlled tenancies.
Restrictions as to termination section 4 of Cap 301 and section 9.

For residential premises cap 296, it applies to where the rent is 2,500 or less per month.
It also applies to premises which are expressly gazetted under the Act by the minister
concerned of public works and housing. When acting for the lessor your duties are

1) Draw the lease you therefore require details and proper instructions as the lease
must not only reflect the precise wishes of the lessor but also the particulars of
the property. Get the exact details that your client wants included. It will even be
appropriate to get plans if possible, doesnt matter how bulky the lease is.

When acting for the tenant

1) Investigate the landlords title, it is implied that the landlord has good title and
has capacity. But sometimes you are aware that the landlord doesnt have
capacity.
2) Approve the draft lease, you need to peruse the lease and see that your client
got what he bargained for, you must then actually share what you have gotten
from the lease and confirm it with your client.
Sykes v. Middlands Bank Co. (1970) 2 All ER 471 the duty is that you dont explain
verbatim to the client but your understand as a lawyer and expert on the covenants.
In this case the lawyer failed to draw attention of the client to the effect of a clause
prohibiting any user other than that of the client, the tenants business was survey
and architecture, unless permission of the lessor as well as the superior lessor has
been obtained. It was held that the clause was unusual and it affected the interest
and the tenant ought to have been warned by his lawyer of the possible arbitrary
refusal by the head lessor of any intended change of user. The advocate was held
liable in negligence, nominal damages of 2 to the client.