KABARAK UNIVERSITY

SCHOOL OF LAW
P.O Private Bag – 20157, KABARAK, KENYA

KLAW 421: CONVEYANCING LAW AND PRACTICE

Mr. Samuel Ngure: samngure@[Link]

LESSON 1
INTRODUCTION

DEFINITIONS

Conveyancing, Convey, Conveyance

Conveyancing is the process by which legal title to property is transferred. The

Law of Conveyancing is concerned with the legal mechanisms by which the
ownership of land, whether frehold or leasehold, or of an interest in land, is
transferred from one person to another. Conveyancing also refers to the speciality
of an Advocate’s practice or business that deals with the alienation of an interest
in land from one person to another.

It is generally understood as the transfer of estates and interest in land by a legal

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

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According to Black’s law dictionary, conveyancing is the art of business of
drafting and preparing legal instruments especially those that transfer an interest
on real property.
There are two parties to the transaction, the transferor and the transferee.

According to prof. Philip Kenney & Russell Hewitson, in their book

“conveyancing in practice” they say conveyancing is concerned with the legal
mechanism whereby the ownership of land or of an interest in land is transferred
from one person to another.
Conveyancing can be referred to as the “how” of the law.

Conveyancing relates to land or an interest to land only.

Conveyancing is the voluntary transfer of interest in property. However, there are

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

Convey is the act of alienation of an interest by means of an appropriate

instrument or document.

A Conveyance is an instrument transferring an interest in land from one person

to another. Examples of conveyances are:

• Transfer
• Lease
• Assent
• Mortgage or Charge
• Discharge
• Easement

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Relationship Between Conveyancing and Other Branches of Law

Land Law

Conveyancing law overlaps with land law in the sense that an understanding of
land law is necessary for the understanding of Conveyancing. However, there is
also a distinction. Land law deals with principles that define actual rights and
interests that can be enjoyed in land. It is “Law at rest.” Conveyancing law, on
the other hand, is concerned with the practical legal procedures and mechanisms
for actualizing those rights and interests through their transfer from one person
to another. It also deals with the process of extinguishing those rights. It is “Law
in motion.”

Law of Contract

There is also a relation between conveyancing law and the law of contract. This is
because interests in land give rise to contractual obligations e.g. a lease, mortgage
or charge. Of particular importance are principles relating to the formation of a
contract, fromalities of written contracts, misrepresentation and remedies for
breach of contract.

Law of Equity

The law of equity is also relevant to conveyancing law and practice in so far as
equitable rights and remedies are concerned. The remedies include specific
performance, injunctions, rectification and rescission.

Law of Succession

Some understanding of the law of succession is also necessary in dealing with

transactions involving personal representatives.
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Company Law

Knowledge of company law is equally important in dealing with companies

involved in conveyancing transactions. Companies are legal persons and can
therefore effect the alienation of an interest in land.

Other areas of Law

Other branches of law such as physical planning law, local government law and
revenue law are relevant to Conveyancing but no specialist knowledge is required.

THE HISTORY OF CONVEYANCING

Much of it is drawn from the English law. In the case of Nyali Ltd v AG [1955] 1
All ER 646 Denning LJ stated that you can transplant an English Olive in Africa
but you must never expect it to thrive with the same foliage and green as it does
somewhere in Manchester or England.
Up to 1535, the transfer of interest in land in England was by primitive method of
surrendering the property to the Lords and they in turn granted the property to
your nominee. There were no formalities and no records.
By 1535, the Lords’ role was set out and consequently if there was to be a
transfer, he prepared a note or an assurance known as the foeffment stating that
the transferor had given up his right over the property to whoever wanted to
secure the property. There was no registration of the same. Delivery was
accomplished by a ceremony known as delivery of ceisine (?) of the property itself
in the presence of all the feudal lords.
After 1535, the first statute relevant to conveyancing was enacted. Before this you
could partition property or swap property.
In 1535, the Statute of Uses was enacted by Henry the VIII. The purpose of this
statute was to mitigate and stall losses that the Crown was incurring because the
feudal lords decided they could also trade on the property.

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Prior to 1535 the land would be owned by the Lords and produce owned by the
state. The Statute of Uses introduced the principle that any property owned was
to be transferred “ unto the use of the transferee and subject to the right of the
crown.” This ensured that any transfer had to be drawn in a particular way.
In 1536, the Statute of Enrolment was enacted with the purpose of keeping the
feudal system. It endorsed the regulation that each conveyance had to be sealed
by the Crown and enrolled within six months with the Chief Lords.
In 1677, the Statute of Frauds was enacted. It required that all conveyancing
documents had to be by way of deed and in writing, sealed by the party
transferring the property before three or more credible witnesses. This has
continued to date.
The Real Property Act 1845 and the Vendor & Purchasers Act of 1874 introduced
the regulation for the transfer of property by way of prescribed forms.
In 1925, the Law of Property Act (later the RLA in Kenya ) was enacted for the
purpose of simplifying conveyancing/transfer and dealings in land. It abolished
particular forms of conveyancing in land simple basic and straightforward forms
introduced. It also abolished various forms of interests and estates in land and
kept only freehold and leaseholds. All land was to be conveyed by way of grant.
In Kenya, we developed our conveyancing along the English model. Prior to 1901,
the Englishmen who were the only ones who could own land did everything.
1. In 1901, the Registration of Documents Act was enacted. It dictated
that (Section 4) any document transferring an interest in land had to be
registered within one month of transferring it. It did not grant any title to
land and no forms were prescribed.
2. The Land Titles Act 1908 – it was intended to apply to the coastal area.
It produced the concept of adjudication. The natives at the coast had
begun conflicts over land and the adjudication process was meant to
resolve conflicts and record with the recorder of titles who the owner was.

3. The Government Lands Act of 1915 – it was meant to control the

interior hinterland. It introduced the deed plan - a document drawn by a
qualified surveyor for purposes of identifying each parcel of land. It also
introduced a systematic approach to registering ownership in land. If the
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 government alienated land and gave someone it would be by way of grant
or indenture of lease and would be registered.

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

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

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

statutory forms to be used in conveyancing. It simplified conveyancing.
Title documents issued under RLA include a Certificate of Lease, a Title
Deed and a Land Certificate.
The RLA had clauses which made title indefeasible notwithstanding even proof
of fraud to protect colonialists who were remaining behind after independence.

REGISTRATION OF DOCUMENTS/DEEDS

1. Registration of Documents Act (1901) RDA (CAP 285)

This Act came into effect in 1901. It is the simplest of all the Acts. It was
intended simply to create a register of documents. Under it, any document can
be registered at the option of the owner. It was the first registration system in
Kenya. The Act provides for both compulsory and optional registration.

Compulsory

S.4 - All documents purporting to confer, declare, limit or extinguish any right,
title or interest in immovable property (except a document of a testamentary
nature) must be registered under the Act within one month after execution. If
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such a document is not registered, it cannot be tendered in court as evidence
without the consent of the court.

Optional

S. 5 - Provides that any document may be registered at the option of the person
holding the document. The most common examples of such documents are
Building Plans, Wills, Powers of Attorney and Deed Polls.

2. Land Titles Act (1908) LTA (CAP 282)

This Act was passed in 1908 and was applied only to the coastal areas. The
system of registration under this Act was more advanced than that under the
RDA. Certificates of Title under this Act are of three types:
i) Certificate of Ownership - freehold
ii) Certificate of Mortgage
iii) Certificate of Interest – other interest

Under S.21 of the Act, a Certificate of Title is conclusive evidence against all
persons (including the Government) of all particulars on it. A Certificate of
Ownership is conclusive proof that the person to whom it is granted is the owner
of all coconut trees, houses and buildings on the land at the date of the
Certificate.

3. Government Lands Act (1915) GLA (CAP 280)

This Act was passed in 1915. Prior to its enactment, all grants of Government
land were required to be registered under the RDA. The system of registration
under the RDA was seriously defective because the RDA described land by
reference to trees, valleys, rivers and springs. The GLA was therefore enacted to
provide for Deed Plans and hence better registration of Government grants and
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subsequent dealings therein. The GLA provided that all future grants of
Government land (i.e. from 1915) and transactions relating thereto would be
registered in the manner prescribed by the Act, and that all past documents
relating to government land that had been registered under the RDA had to be
registered afresh under the GLA. The GLA was meant to apply to the hinterland
– i.e. the highlands and other white settlement areas in the interior.

NOTE: The method of registration under the LTA and GLA is the same. The LTA
and GLA are normally taken together since the form of documentation is similar
under both Acts. This form follows the old English system of conveyancing which
was done in accordance with the Real Property Act of 1845 and the Conveyancing
Act of 1881 both of England. These were statutes of general application as at 12th
August 1897. Under those statutes, conveyancing was by way of deed and the
instrument had to be under seal.

REGISTRATION OF TITLE

1. Registration of Titles Act (1920) RTA (CAP 281)

The form of documentation under the RTA follows the statutory form: See S. 33
RTA. This section prohibits the Registrar of Titles from registering under the Act
any document or instrument which is not in statutory form. The statutory forms
can be found in the Schedules to the Act.

There is, however, a qualification to the section: The Registrar is given a

discretionary power to register an instrument which is substantially in
conformity with the statutory form. In view of this discretionary power,
Advocates have in practice continued to draft documents following the old

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English system of conveyancing to a considerable extent. In so doing, the format,
in some respects though not all, is similar to the LTA and GLA format.

2. Registered Land Act (1963) RLA (CAP 300)

Under this Act, the form of documentation is statutory. The form cannot be
varied without the prior approval of the Land Registrar: S.108 states that “every
disposition of land lease or charge shall be effected by an instrument in the
prescribed form or in such other form as the Registrar may in any particular case
approve and every person shall use a printed form issued by the Registrar unless
the Registrar otherwise permits.”

Definition of “Disposition” under RLA S.3

It is defined as “any act by a proprietor whereby his rights in or over his land,
lease or charge are effected but does not include an agreement to transfer, lease
or charge.”

PROCEDURAL AND SUBSTANTIVE LAW APPLICABLE UNDER THE

LTA, GLA, RTA AND RLA

This refers to the procedural and substantive law that governs transactions under
the land registration systems and the relationship between the parties.

LTA, GLA and ITPA

LTA - Procedural law is found in the LTA itself; substantive law is found in the
ITPA 1882 as amended in 1959

GLA - Procedural law is found in the GLA itself; substantive law is found in the
ITPA 1882 as amended in 1959
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RTA – Procedural law is found in the RTA (and GLA where there has been a
conversion from GLA to RTA) but the substantive rights are contained in the
ITPA.

For LTA, GLA and RTA, where the Acts are silent, the ITPA applies. Where the
ITPA is silent, the common law as modified by the doctrines of equity applies.

RLA - The Act itself contains both the procedural and substantive law. S.163
states that “subject to the provisions of the RLA and save as may be provided by
any written law for the time being in force, the common law of England as
modified by the doctrines of equity shall extend and apply to Kenya in relation to
land, leases and charges registered under the Act and interests therein but
without prejudice to the rights, liabilities and remedies of the parties under any
instrument subsisting immediately before such application.”

S.164 RLA – provides that the ITPA ceases to apply upon first registration under
the RLA. Therefore, where the RLA applies, it ousts the ITPA, common law and
equity. Where the RLA is silent, the common law of England as modified by the
doctrines of equity applies. The ITPA does not apply to the RLA.

NEW LAND LAWS

Article 60[2] (Of the Kenyan constitution) sets out the principle of land policy
that are supposed to guide the use and management of land such as equitable
access to land, security to land rights, transparent and cost effective
administration of land, encouragement of.....see below
Article 60(2) provides these principles shall be implemented through a national
land policy developed and reviewed regularly by the national government and
through legislation.
Article 68 of the constitution provides as follows:
Parliament shall:
A. Revise, consolidate and rationalize existing land laws;

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B. Revise sectorial land use laws in accordance with the principles set out in
article 60(1)
- The land act of 2012
The preamble says “An Act of Parliament to give effect to Article 68 of the
Constitution, to revise, consolidate and rationalize land laws; to provide for the
sustainable administration and management of land and land based resources,
and for connected purposes.”
Land law; Repeals Wayleaves act, also repeals the land acquisition act cap 285
Section 3 of the land act provides that 3. (1) This Act shall apply to all land
declared as—
(a) Public land under Article 62 of the Constitution;
(b) Private land under Article 64 of the Constitution; and
(c) Community land under Article 63 of the Constitution and any other written
law relating to community land.
Section 5 of the act provided for the various classifications of land tenure in
Kenya.
Section 7 provides for various methods of acquisition of land.
The land registration act of 2012
Preamble sets out “An Act of Parliament to revise, consolidate and rationalize
the registration of titles to land, to give effect to the principles and objects of
devolved government in land registration, and for connected purposes.”
It is modeled in the registration provisions of the registered land registration act.
Section 3 &5 provide that this is the registration law applicable to all private and
community land.
It repeals the following statutes;
Indian transfer of property act 1882
The government land act
Registered titles act
The land titles act
Registered land act
Registration of Deeds System

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The Registration of Deeds system entails a fairly basic and simple instrument of
records of all the various transactions relating to a particular piece of land. These
transactions are recorded in the Register. Registration of a transaction under the
Registration of Deeds system is merely evidence that the transaction occurred. It
is not proof of the validity or legitimacy of the transaction. This is because the
Register is not the subject of scrutiny at this stage or thereafter.

In effect therefore, the Registration of Deeds system is of fairly limited use. One
may therefore only use it to indicate that a particular transaction did occur
between the parties. Besides, there is no requirement for the registration of the
transactions to be undertaken in chronological order. A person cannot therefore
rely on the details recorded in the Register under the Registration of Deeds
system as proof of the correctness or validity of the transaction in question. This
is due to the fact that the system has no process of scrutinizing the documents
before registration. This has been occasioned by its rather liberal and relaxed
nature. Also under this system, the State does not guarantee title or provide
indemnity for any errors.

Registration of Title System

In contrast, the Registration of Title system is a much more detailed system

under which every instrument presented for registration regarding a particular
transaction is thoroughly scrutinized following strict rules and the transaction is
recorded in chronological order. Under the Registration of Title system, the
Register is the final authority on the record of an interest relating to a clearly
defined unit of land. The Registrar is mandated to verify the details of any
transaction and its validity before recording the transaction in the Register. The
Register therefore contains all the necessary details as to how the interests in a
particular piece of land have been acquired or transferred from the first step upto
the end.

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The Registrar is also under an obligation to ensure that a transaction which is
mandatorily required by law to be registered is indeed registered before issuing
any Title Deed or other certificate.

The Registration of Title system, unlike the Registration of Deeds system,

therefore enjoys specific advantages as set out below.

(i) Firstly, it brings finality and certainty to matters relating to title by way
of updates of official records from time to time. This eliminates waste
of time in digging into historical records on past transactions.

(ii) Secondly, under this system, the State guarantees title and provides
indemnity for any errors made in the Register, thereby reducing risk to
transacting parties.

(iii) Thirdly, it provides for mechanisms for correcting the entries in the
Register.
(iv) Fourthly, it has the capacity of reducing conflicts regarding ownership
of and title to a particular piece of land by ensuring that the right
person is registered as the owner of a particular piece of land.

(v) Finally, it provides the owner of a particular piece of land with concrete
evidence of such ownership subject only to the entries in the Register
qualifying or limiting such ownership.
Distinction between Registration of Documents/Deeds and
Registration of Title

Registration of deeds comprises a system whereby written agreements

between two or more persons are registered in some form of a public record.
These written agreements are referred to as deeds or documents. The deed does
not itself prove title; it is merely a record of an isolated transaction. It shows that
a particular transaction took place but it does not prove that the transaction is
valid.
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Registration of title is a system comprising an authoritative record kept in a
public office. It is a record of the rights of clearly defined units of land as vested
for the time being in some particular person or body. It is also a record of the
limitations, if any, to which these rights are subject. A perusal of the Register will
reveal all material particulars affecting the land.

The main distinction between the deeds and title systems is that under the
system of Registration of Documents or Deeds, the Government is not concerned
with the validity of the transaction. Rather, registration of the document or deed
is only intended to show or provide evidence that a transaction has taken place.
The State does not guarantee title here. The onus of scrutinizing the documents is
placed upon the party presenting the document for registration.

In contrast, in Registration of Title, every document presented for registration is

thoroughly examined and investigated before being registered against the title.
Under the RTA and RLA which are title registration systems, the Register is
conclusive evidence of title, the assumption being that the Register has been
compiled correctly. In both cases, the State guarantees title.

The land registration systems in Kenya were of two types:

1. Registration of Documents or Deeds - The following Acts fall under this

type:

a. Registration of Documents Act (Chapter 285 Laws of Kenya, RDA)

(Repealed)
b. Land Titles Act (Chapter 282 Laws of Kenya, LTA) (Repealed)
c. Government Lands Act (Chapter 280 Laws of Kenya, GLA).
(Repealed)

2. Registration of Title – The following Acts fall under this type:

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a. Registration of Titles Act (Chapter 281 Laws of Kenya, RTA)
(Repealed)
b. Registered Land Act (Chapter 300 Laws of Kenya, RLA). (Repealed)
c. Land Registration Act (LRA)

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LESSON 2

SCOPE OF CONVEYANCING

The scope of conveyancing covers the various procedures for certain land transactions. It
deals with practical issues such as how one negotiates and concludes a lease, mortgage,
charge, transfer or other transaction and how the relationship between the parties to the
transaction is determined.

Stages of a Transaction

Conveyancing therefore deals with the various stages of a transaction. These include:

• Preliminaries – this involves obtaining instructions from the client

• Investigation of title - e.g. searches and examination of documents of title
• Contractual stage – this stage involves negotiation of terms
• Documentation – this is the legal framing of documents; it is the art of drafting;
it incorporates into writing the terms that the parties have negotiated and
agreed upon
• Completion stage (also referred to as the Conveyance Stage) – this entails the
finalization of a transaction and handing over of the necessary documents to
the relevant parties to the transaction to facilitate registration and also after
registration.

Conveyancing also includes other procedural matters such as execution, attestation,

stamping and registration of documents.

Conveyancing also involves the construction or interpretation of documents.

Conveyancing may also involve litigation, e.g. where a transaction fails and
parties resort to the court process for determination and enforcement of
their rights

UNDERLYING NATURE OF CONVEYANCING

Who is a conveyancer?
The main work of a conveyancer is to draft, construct documents, and then utilize the
instruments for creating and transferring instruments in land and ensure the person has
a marketable title.

Three critical elements of the definition:-

1. Process – All applications from the appointment of the estate agent to the time you
actually get a duly registered title.
2. Legal Title interest being transferred – What is transferred must be legal.
3. Transfer – Voluntary transfer. You can also transfer title to yourself e.g if you are
a beneficiary of an estate. Also includes the modification of ownership e.g in joint tenants.

Conveyancing is the art or science of conveying or effecting the transfer of property or

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

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

There are instances where interest in property will pass without formal methods of
conveyancing being followed. E.g. Adverse Possession
Statutes of Limitation dictates if a party is in possession of property continually for a
period of 12 years and such possession is adversely exercised with the intention of
excluding the whole world from claiming an interest to the property, the court is under a
duty to declare the party the owner of that property and that the judgment is a judgment
in rem.
 BASIC REQUIREMENTS IN CONVEYANCING
1. Documentation
This is the requirement of writing, which finds its origin in section 3 of the Law of Contract
Act. There are other semi formalities e.g execution of the document, attestation of the
execution, verification of the execution process and other statutory requirements.

Section 3 of the Law of Contract Act and section 97 of the Evidence Act (parole evidence
rule) demand that a transaction relating to land must be in writing.

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

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

Section 3 of the Law of Contract Act dictates:

 1. That the agreement must be in writing;
2. That the agreement be signed by both parties;
3. The execution of the agreement must be independently witnessed.

NB// The agreement must be in one document but there is an allowance for cross-
reference e.g. there is often reference to the LSK Conditions for Sale 2015.

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

Registration serves the following purposes:

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

How is Registration Effected?

Under the LRA, there is a proper register (Forms LRA 1 & 2).
Section 7 (4) of the LRA dictates that each particular parcel of land must have its own
register. The RLA register has three sections:

1. The property section

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

2. The proprietorship section

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

3. The encumbrance section

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

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

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

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

2. The Fee Simple

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

The land is owned without the Government interest interfering until there is nobody to
inherit. The doctrine of bona vacantia will apply and the land will revert to the state.

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

4. Interests of Third Parties as against registered proprietors.

These are either encumbrances and or servitudes.

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

Servitudes are not necessarily created by the registered proprietor on their own parcels of
land. They are created for the interest of third parties on others parcels of land e.g.
easements and restrictive covenants. Easements could be created by statute

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

Per LORD COTTENHAM, LC: If an equity is attached to property by the owner, no one
purchasing with notice of that equity can stand in a different situation from that of the
party from whom he purchased.
Facts: The owner of land in Leicester Square had covenanted with neighbouring
landowners to `keep the park uncovered with buildings'. At common law, the covenant
was enforceable only between the original parties to the covenant, just as a contract would
be. When the land was sold, the purchaser wished to build on it, despite his knowledge of
the covenant. It was held that it would be inequitable to allow him to do so. This
established that the burden of a covenant which was restrictive in nature (see
RestrictiveCovenant) could `run with the land', despite privity of contract. For the burden
to run, the covenant had to `touch and concern' the land, rather than being for the benefit
of a particular person, and it had to be intended that the covenant bind the land.

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

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

Registration is what gives effect to conveyancing. Other effects of registration of title or of

a person as the proprietor of land under the LRA include extinguishing communal land
ownership.
79. Rectification by Registrar
(1) The Registrar may rectify the register or any instrument presented for
registration in the following cases—
(a) in formal matters and in the case of errors, mistakes or omissions not materially
affecting the interests of any proprietor;
(b) in any case and at any time with the consent of all affected parties; or
(c) if upon resurvey, a dimension or area shown in the register is found to be
incorrect, in such case the Registrar shall first give notice in writing to all persons
with an interest in the rectification of the parcel;
(d) for purposes of updating the register;
(e) for purposes of correcting the name, address or other particulars of the
proprietor upon the written application by the proprietor in a prescribed form.
(2) No alteration affecting the title of the proprietor may be made pursuant to sub-
section (1) without the proprietor' s consent unless—
(a) the proprietor has by fraud or lack of proper care caused or
substantially contributed to the error, mistake or omission; or
(b) it would for any other reason be unjust for the alteration not to be
made,
Provided that a written notice of ninety days shall be given to the
proprietor of
such intention to make the alteration.
(3) Upon proof of the change of the name or address of any proprietor, the
Registrar shall, on the written application of the proprietor, make an entry in the
register to record the change.
(3A) A person aggrieved by the decision of the Registrar under this section may
apply to the Court for any necessary orders.
(4) The Cabinet Secretary may by regulations prescribe the guidelines that the
Registrar shall follow before rectifying or directing rectification under this section
and without prejudice to the generality of the foregoing, the regulations may
provide for—
(a) the process of investigation including notification of affected parties;
(b) hearing of the matters raised; and
 (c) the criteria to be followed in coming up with the decision.
[Act No. 28 of 2016, s. 26.]
80. Rectification by order of Court
(1) Subject to subsection (2), the court may order the rectification of the register
by directing that any registration be cancelled or amended if it is satisfied that any
registration was obtained, made or omitted by fraud or mistake.
(2) The register shall not be rectified to affect the title of a proprietor, unless the
proprietor had knowledge of the omission, fraud or mistake in consequence of
which the rectification is sought, or caused such omission, fraud or mistake or
substantially contributed to it by any act, neglect or default.

Section 24, LRA states that absolute ownership is subject to the provisions of the Act.
The interest is only subject to priority rights.

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

In the case of overriding interests, although not registered, they are recognised. They are
all such encumbrances; rights interests and powers not entered in the register but subject
to which dispositions that are registered are to take effect.

Section 29 of the LRA provides for overriding interests:

Unless the contrary is expressed in the register, all registered land shall be subject
to the following overriding interests as may for the time being subsist and affect
the same, without their being noted on the register—
(a) deleted by Act No. 28 of 2016, s. 11(a);
(b) trusts including customary trusts;
 (c) rights of way, rights of water and profits subsisting at the time of first
registration under this Act;
(d) natural rights of light, air, water and support;
(e) rights of compulsory acquisition, resumption, entry, search and user conferred
by any other written law;
(f) deleted by Act No. 28 of 2016, s. 11(b);
(g) charges for unpaid rates and other funds which, without reference to
registration under this Act, are expressly declared by any written law to be a charge
upon land;
(h) rights acquired or in process of being acquired by virtue of any written law
relating to the limitation of actions or by prescription;
(i) electric supply lines, telephone and telegraph lines or poles, pipelines,
aqueducts, canals, weirs and dams erected, constructed or laid in pursuance or by
virtue of any power conferred by any written law; and
(j) any other rights provided under any written law,
Provided that the Registrar may direct the registration of any of the
liabilities,rights and interests hereinbefore defined in such manner as the Registrar
deems necessary.

See: Mbui v Mbui EA 2005 256 (Pre-LRA: s. 30 of the RLA did not include customary
trusts) where the court of appeal stated that registration does not extinguish customary
law rights. In this case, the son who had been in occupation of the land sued his father
who was trying to stop him from transferring 2 parcels of land registered in his father’s
name under the RLA. His case was dismissed but he continued occupying the land. His
father sought to evict him on the basis that his son had threatened him. He also appealed
on the basis of being the registered owner of an absolute and indefeasible title. His son
argued that he was entitled to the land as a birthright under Kamba customary law.
The court held in dismissing the appeal that the father’s right although absolute was still
subject to the rights and encumbrances noted in the register. It also held that such right
was subject to overriding interests, which included customary law rights giving rise to a
trust that arose from the son’s continued occupation of the land.
See also: Ogongo v Ogongo CA No. 29/2003 and Muthui v Muthui.

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

See: Barclays Bank v O’Brien which held that in mortgages, if the wife does not
obtain independent legal advice, then an issue as to the validity of the mortgage arises.
She can lay claim to the property.

Overriding interests can also be created by proprietary estoppel. If you represent to a

party that the party can exercise such rights on your property to be deemed an owner of
the same and relying on your representation that party acts to his detriment, the court is
under a duty through the principle of proprietary estoppel to declare the party as the
owner of the property.
Lim Teng Huan v Ang Swee Chuan [1991] UKPC 40:, two cousins bought land
jointly. Mr. Ang wanted to build a house on the land. Mr. Lim agreed to his cousin’s
request, on the condition that Mr. Ang pay him half the value of the land at some point.
They then entered into an agreement. Mr. Ang went on to build a house. A dispute broke
out between the cousins, and Mr. Lim attempted to rescind the agreement and reclaim
half of the developed land. At trial, the agreement was found to be fatally defective and
legally unenforceable. However, the Privy Council found that Mr. Ang could be declared
beneficial owner of the property as he had relied on his cousin’s representations to
improve the land at great cost, knowing that he would become beneficial owner. It was
established that for proprietary estoppel to be established, the following elements must
be present:
(i) A believed that he had a right in or over B's land;
(ii) B created or at least encouraged the belief; and
(iii) A acted to his detriment on the basis of the belief

Macharia Mwangi Maina & 87 Others v Davidson Mwangi Kagiri [2014]

eKLR:
Mr. Kagiri, joint owner of a large parcel of land (512 acres), decided to subdivide his “half”
of the jointly owned land into 1 acre pieces and sell them. He drew up a plan, and begin
to sell of pieces of land to people who settled on the land, creating a settlement that
included a school and water and electricity access facilities. At this point, the land had not
been subdivided, and as such, the consent of the Land Control Board had not yet been
sought. Once subdivision occurred, Mr. Kagiri attempted to rescind the agreements. The
appellants sued the respondent unsuccessfully in the High Court. At the Court of Appeal,
the Court overturned the decision of the High Court. It stated that proprietary estoppel
existed against the Respondent so as to create a constructive trust under the RLA
(repealed) s. 30 (g), which created an overriding interest in favour of the “rights of a
person in possession or actual occupation of land…” He could therefore not rescind the
agreements, despite the fact that they were fatally flawed by a failure to get the LCB
Consent.

In Twalib Hatayan & Anor vs. Said Saggar Ahmed Al-Heidy & Others [2015]
eKLR, the Court of Appeal examined and stated the law on constructive trusts as follows:
-

A constructive trust is an equitable remedy imposed by the court against one who
has acquired property by wrong doing. … It arises where the intention of the
parties cannot be ascertained. If the circumstances of the case are such as would
demand that equity treats the legal owner as a trustee, the law will impose a trust.
A constructive trust will thus automatically arise where a person who is already
a trustee takes advantage of his position for his own benefit (see Halsbury’s Laws
of England supra at para 1453). As earlier stated, with constructive trusts, proof
of parties’ intention is immaterial; for the trust will nonetheless be imposed by
the law for the benefit of the settlor. Imposition of a constructive trust is thus
meant to guard against unjust enrichment. …
Christine Wambui Mwaura v Njambi L. K. Githegi [2019] eKLR
The two parties were widows of two men who had bought land jointly. Subdivision of the
land had proved difficult as the land was being developed. The husband of the Defendant
had asked the Appellant’s husband to allow him to take up the entire piece of land in
return for a half share of another piece of land, referred to as Chania Farm. The Defendant
(wife) was present at this meeting. This was agreeable to the Appellant’s husband. Both
men died before legally subdividing Chania Farm. After their death, the Defendant
registered the entire Chania Farm in her name. The High Court found that the Defendant
breached a constructive trust, and ordered her to issue half the land to the Plaintiff.

s. 30 (3): A certificate of title or certificate of lease shall be prima facie evidence of the
matters shown in the certificate, and the land or lease shall be subject to all entries in the
register.

s. 30 (1): If a certificate of title is issued, it shall be presented upon any subsequent

registration dealing with the land.

Registration of property by way of grant or title has the effect of bringing land under a
particular substantive law. Thus for new registrations in land that is previously registered
in repealed acts, registration of new dealings will bring the issuance of a new title under
the LRA.
.

Registration has the effect that any document registered under any regime constitutes
conclusive evidence of the interest availed or passed by that instrument unless it is proved
otherwise in a court. The fact of registration speaks for itself.

The Effect of Non-registration

1. No passing of interest.
 2. Non-registration of particular documents, which ought to be registered by
statute as a matter of course or compulsory requirement, makes such a
document invalid.

The proprietor’s rights in rem remain unsecured if there is no registration. This would
apply to charges.
See: Merali v Parker [1956] KLR 26:
The issue was one involving the effect of non-registration of a sub lease for which there
was a legal requirement for registration. In the observation of the court and with regard
to the provisions with sections of the GLA the effect was that whereas evidence could not
be adduced in court from such an unregistered document to prove existence of a lease for
more than one year, such a document could be relied upon to prove the existence of an
agreement for a lease from year to year and the effects of this created and the couple being
in possession created what could be regarded as year to year tenancy which could only be
terminated in accordance with the provisions of ITPA in line with Section 106 and116
which makes it mandatory for 6 months notice period to be issued.
Clarke v Sondhi [1963] EA 107:
The lessor purported to lease out certain premises to the lessee for a period of 3 years at
an agreed annual rent which was to be paid in specified monthly instalments. The lessee
had possession of the premises and in the course of time fell into rent arrears thereby
forcing the Lessor to bring an action for recovery of the same. In his defence the Lessee
introduced or contended that the Lessor had no valid cause of action owing to the fact
that the lease was not registered as was by law required under the provisions of the RTA
and it was this position that on account of this fact that the entire arrangement was void
or unenforceable and that such an arrangement was incapable of passing any legal estate
inland. In the opinion of the court, the unregistered lease could operate as a contract
inter-parties and consequently the Lessee could not escape to pay any rents due.

In the case of Rogan Kamper v Grovenor [1977] KLR 123 where Grovenor
attempted to rely on a clause on a draft unsigned and unregistered lease. Rogan Kamper
said since it was not registered it was not applicable. It was held that an unsigned and
unregistered lease could not bind the parties, but that a tenancy agreement on a month
to month basis arose on the basis of the tenant taking up possession of the property and
paying the first month’s rent.

s. 36 (2), LRA: an unregistered document operates as a contract inter-partes.

How & When is Registration Effected

s. 36 (4): Registration shall be done within 3 months from the date of the instrument
(execution). Any later registration shall be liable to penalties.

Registration is effected by filling out the necessary documents required to be presented

for registration and presenting the document to the relevant land registry. Registration
is affected by the law of priority- the first document takes precedence. .

If it were a conveyance by a company, it would also have to register the instrument at the
company registry. Sections 878-885 of the Companies Act (No. 17 of 2015) state
that charges against a company’s property must be registered with the Registrar of
Companies. This was to guard against fraud, insolvencies etc. The same applies for
charges and mortgages. S. 889 of the Act provides that an unregistered charge becomes
void as against a liquidator or administrator of the company, and other creditors (such as
in the event of the wrapping up of a company). In such a case, this section provides that
the charge becomes evidence of a debt as against the company, with the effect of turning
the chargee from a secured to unsecured creditor of the company.

For co-operative societies, lodge the charge or mortgage with the Registrar of Societies.
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INVESTIGATION OF TITLE
Without a good title there will be no conveyance. Why do we investigate title?
1. Prudence demands that you investigate anything that you want to acquire. By
investigating title, it gives you an insight of the property you intend to buy or take
as security
2. All land principles have the principle of a bona fide purchaser for value without
notice who acquires a good title. Proving that you have bona fides- good faith,
requires that you investigate title as it will inform you whether there are any
encumbrances or defects in the title.
3. The caveat emptor principle demands that the buyer is responsible for checking
the quality as well as the suitability of the property he intends to acquire.
4. Investigation of title is not only confined to the registry or title deed alone but also
extends to the physical structure of the property e.g. whether the land is fit for
purpose and corresponds to the verbal descriptions given by the seller.

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

Richard Odual Opole vs Commissioner of Lands & 2 Others (2015) eKLR (CoA):
where there is a tainted and irregular procedure leading to the registration of the title,
one cannot be a bonafide purchaser for value without notice.

Samuel Kamere v Land Registrar (2015) eKLR (CoA):

“ in order to be considered a bonafide purchaser for value, a person must prove that he
had acquired a valid and legal title, secondly that he carried out the necessary
due diligence to determine the lawful owner from whom he acquired
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legitimate title and thirdly that he paid valuable consideration for the purchase of the
suit property.”

M W K v S K K & 5 others [2018] eKLR:

In this case, a purchaser bought land from a man who the Purchaser knew was married
without obtaining spousal consent. The purchase was registered and title transferred. He
then transferred the property to a third party, who used the property to secure a loan from
a SACCO, and a charge was registered (the 3rd party sought the consent of his wife to
register the charge). The transactions were quick- successive transfers and registration
resting with the charge of the suit property in a span of 37 days. Held:
“the 2nd Defendant did not have a valid and legal title that he could transfer to the 3rd
Defendant. Secondly due diligence by the 3rd Defendant ought to not only have been
evidenced by a search but also an enquiry from the 2nd Defendant as to how the title to
the suit land was obtained... The Court does not find any bonafides in respect of the 3rd
Defendant’s conduct relating to due diligence at the time of purchasing the suit land
from the 2nd Defendant. Having received no good title could the 3rd Defendant pass a
good title by way of a charge to the 4th Defendant? The answer is in the negative.”

When do you investigate title or property

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

Mediums of investigation of title/property

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

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

There are currently 61 registries in Kenya.

There are two types of searches:

a) Official Search
This is where the registrar does the inspection of the register or search upon one’s written
request in the prescribed form. The registrar subsequently issues a certificate of official
search. S. 34 of the Land Registration Act provides for an application for a search, effected
by application in form LRA 84, and a Certificate of Official Search is issued in Form LRA
85.

NOTE: The Lands Registry always has two files relating to a parcel of land i.e. deed file
and correspondence file

b) The Historical Search

This has been prompted in modern day conveyancing by the “Ndungu Report of 2004
into Illegal Allocation of Land”.

For one to have access to the correspondence file one needs to write a letter to the Land
Registry and access is granted. Correspondence arises from the history of the land i.e.
when it was registered, subdivided etc
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See: Gitwany Investment Ltd v Taj Mal Ltd & 2 Ors HCCC 114 of 2004 [2006]
eKLR
Lenaola J. relied greatly on the correspondence file in making a finding on who was the
rightful owner of the land. The case involved double allocation of land. The learned Judge
relied on the historical search to establish the first allocation of the land to the Plaintiff
and therefore invalidated the Defendant’s title that had been allocated second.

National Land Commission v Afrison Export Import Limited & 10 others

[2019] eKLR
A search on a piece of land, conducted in January 2018 showed that there were no
encumberances on the land. A second search on the same piece of land, conducted in
August 2018 showed that there were two undischarged mortgages on the same piece of
land.
"Based on the inherent danger of the search system which is based on the Torrens
System of registration, it is necessary for one to take further steps to ascertain the
authenticity of the search and ownership of the land. If the Applicant had bothered to
delve into the history of the title, it would have discovered that the title had two
mortgages besides other entries in the register and the other transactions in respect of
L.R. No. 7879/4 which were not noted on the register…

“We do not think the Applicant’s contention that it solely relied on the search when
undertaking the compulsory acquisition of the land on which the two schools sit was
diligent and pragmatic…

“Section 28 of the Land Registration Act lists overriding interests that subsist and affect
land but which need not be noted on the register. One of these interests is rights acquired
or in the process of being acquired by virtue of any written law relating to the limitation
of actions or by prescription. In undertaking due diligence, one must go further and
ascertain if there are any overriding interests affecting the land they wish to transact
on. In light of the foregoing, our finding is that a search is not conclusive evidence of
ownership. One needs to go further than a mere search.”
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Once you are through with the search you should inform your client of any adverse entry.
You should then clarify with the other side whether the transaction can proceed or not.
You should satisfy yourself that whatever adverse impacts/entries revealed will not
adversely affect your client e.g. if there is a mortgage, whether the sale price will clear the
mortgage in full.

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

A search at the Companies’ registry will reveal whether the company still exists, whether
there are insolvency proceedings etc

A search at the Survey Department involves a consideration of the boundaries.

A local authority search will reveal any adverse proposals e.g. advice to the Government
of compulsorily acquiring land for public purposes

CHALLENGES IN SEARCHES
1) Unavailability of deed files or “missing titles”
2) Mutilation and destruction of files and documents in the files
3) Delays with regard to search results. You need about seven
clear working days before you get them, especially in registries
that are not digitized.
4) Unavailability of Land Registers to sign your searches i.e. lack
of efficiency and skilled manpower at the Land Registries
5) Slow pace of digitization of land records.
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Significance of Searches
1) Failure to carry out a search may lead to the failure to register a
document e.g. because of the existence of encumbrances
2) The vendor may turn out not to be the owner of the property. This
can be discovered by a search
3) The title document may be a forgery
4) The above errors occasioned because of omitting to carry out search
may lead to negligence suits against you.

LETTERS OF ALLOTMENT
This come from the Government through either the Commissioner of Lands or the Local
Council if it is Council Property. Letters of allotment were issued under S.3 (a),
Government Lands Act (GLA) which provides for alienation of unalienated land. The
issuance of letters of allotment was accompanied by the physical Development Plan of the
area.

A letter of allotment is only valid where none has been issued before- a 2nd letter of
allotment is invalid and irregularly issued, and cannot give valid title.

Benja Properties Limited v Syedna Mohammed Burhannudin Sahed & 4

others [2015] eKLR: an allotment of an interest in land is a transaction in rem attaching
to and running with a specific parcel of land.

As such, where a letter of allotment has been validly issued before and is still in force, or
where a valid title is issued upon the land, no letter of allotment can be issued on the
property.

Philemon L. Wambia v Gaitano Lusitsa Mukofu & 2 others [2019] eKLR

In this case, there were competing claims to a piece of land. The Appellant claimed that
he had been allotted the land in 1984- the allotment letter he produced in court however
was dated 1986. The Respondent had bought the land from a Mr. Muthurania who had
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an allotment letter dated 1984. The Respondent had a valid certificate of title in his name,
issued on the purchase of the land from Mr. Muthurania in 1985. In deciding who held
proper title to the land, the CoA stated the following:

“36. On our part, we have considered the evidence on record on the two letters of
allotment. The evidence on record shows that the first allotment to the suit property was
to Mr. Joseph Muturi Muthurania. In Benja Properties Limited -v- Syedna Mohammed
Burhannudin Sahed & 4 others [2015] eKLR, this Court stated that an allotment of an
interest in land is a transaction in rem attaching to and running with a specific parcel
of land.
37. In the instant case, the second letter of allotment to the appellant did not
attach in rem to any land since there was no parcel upon which the
allotment could attach. The first allotment to Mr. Joseph Muturi Muturania
effectively made the suit property unavailable for allotment to the appellant the more
when the first allottee had fulfilled the terms and conditions of the allotment.”

It is risky to deal with a letter of allotment e.g.

1. Most have stringent conditions which if not complied with within the stipulated
time automatically revokes the letter of allotment
2. One may carry out a historical search on land being allotted on the general file i.e.
zone file and correspondence file etc. in carrying out a search on the basis of a letter
of allotment look out for planning conducted e.g. by the Local authority. Look for
the Part Development File (PDF) which should be properly prepared and signed
by the Chief Physical Planner and Commissioners of Land
NOTE: The CA has held that unless a letter of allotment is registered it is not recognized
in law- Wreck Motor Enterprises v Commissioner of Lands and 3 Others
[1997] eKLR. In Stephen Mburu & 4 Others v COMAT MERCHANT LTD &
Anor. [2012] eKLR, the High Court (Kimondo J.) held that “a letter of allotment is not
a title to property. It is a transient and often conditional right or offer to take the
property.” It can therefore be superseded by a duly acquired title, even if acquired after
the letter of allotment.
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CONSTRUCTION OF DOCUMENTS

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

The following are the main rules of construction:

Lesson Outline
1. Express Intention

Look at the express intention of the parties. The court looks at the words actually used by
the parties. The question to ask is: "What is the meaning of what the parties have said?"
and not "What did the parties mean to say?". The court looks at the express, not presumed
intention of the parties.
SUN SAND DUNES LIMITED V RAIYA CONSTRUCTION LIMITED CIVIL
APPEAL NO. 26 OF 2017 [2018] eKLR;
“The object of construction of terms of a contract is to ascertain its meaning or in other
words, the common intention of the parties thereto. Such construction must be objective,
that is, the question is not what one or the other parties meant or understood by the
words used. Rather, what a reasonable person in the position of the parties would have
understood the words to mean.”

2. Whole Document

The document must be read as a whole. Where the transaction between the parties is
contained in more than one document, e.g. a Lease and a Renewal of Lease or Further
Lease, the two documents must be construed together. See:

Plumrose Ltd v. Real and Leasehold Inv. Society Limited (1969) 3 All ER 1441
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Held: Where one lease was described as supplemental to the other, the two leases were
to be read together in order to determine whether the supplemental lease incorporated a
covenant for renewal.

Samuel Ngige Kiarie v Njowamu Construction Company Limited & another

[2019] eKLR: a clause in the contract cannot be read in isolation, “because, in order to
give the full effect of the agreement, we must look at it as whole.”

3. Ordinary Meaning

Words must be given their ordinary meaning as well as their grammatical meaning.
Ordinary - refers to the popular meaning or the meaning which the ordinary usage of
society applies to it.

SAVINGS AND LOAN KENYA LIMITED V MAYFAIR HOLDINGS

LIMITED [2012] eKLR;
“….Therefore, the intention of the parties should be construed with reference to the object
and the terms of the agreement. If the words used in the agreement are clear they should
be construed in their ordinary meaning so as to establish the intention of the parties.”

There are two exceptions to this rule:

(i) The courts will give words and phrases any special, technical or customary meaning
which the parties must have intended. E.g:

"person" includes a limited company

"month" means calendar month
"singular" includes plural
"masculine" includes feminine (and vice versa)
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(ii) Where the court is of the opinion that the ordinary meaning would lead to some
absurdity, repugnancy or inconsistency with the rest of the document, it will modify that
meaning to avoid that result.

4. Extrinsic Evidence

Such evidence is not admissible to add to, vary or contradict the terms of the document.
There are three exceptions:

(a) Extrinsic evidence is admissible to explain the meaning of the words used or to resolve
a latent ambiguity in a document. E.g. "repair"- in order to determine the meaning of the
word "repair" in a covenant to repair, it is necessary to have regard to the age character
and locality of the leased property at the time of granting the lease. Extrinsic evidence
therefore explains the technical meaning of the word "repair".

(b) Surrounding circumstances existing at the time of executing the document may be
looked at to place the court in the position of the parties.

(c) Extrinsic evidence is admissible to show that a document is not binding on grounds of
fraud or mutual (common) mistake.
Kukal Properties Development Ltd v Tafazzal H. Maloo & 3 others [1993]
eKLR
The purchasers agreed to buy two maisonettes from the Vendor, with the help of facilities
from financial institutions introduced by the Vendor to the Purchasers. The contract
stated that the Purchasers were to produce evidence of having obtained facilities from the
institutions within 40 days of execution of the contract and payment of the deposit, failing
which the Vendor would rescind the contract and refund the deposit minus an
administrative fee. Despite successful negotiations with the financial institutions, the
institutions failed to deliver on the facilities to the Purchasers in time, and the Vendor
rescinded. The Purchasers sued the Vendor seeking specific performance, and sought to
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introduce extrinsic evidence setting out that it was the Vendor’s responsibility to ensure
that the financial institutions- that it had introduced the Purchasers to- delivered on their
bargain. Held: one cannot introduce negotiations, and in particular “priority”
negotiations- those held prior to execution of a contract- to nullify the written terms of a
contract where there is no ambiguity, fraud or common mistake.

5. Clerical Errors Corrected

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

6. "Contra - Proferentem" Rule

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

7. "Ejusdem Generis Rule"

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

NOTE: If the general words are not to be so limited, there must be a provision to effect
such intention, e.g. "including but not limited to".

8. "Expressio unius, exclusio alterius" Rule

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An express provision automatically ousts an implied provision. E.g. Implied terms in a
lease will be ousted by express provisions contained in the lease document executed by
the parties.
Mbururi Matiri & Sons v Nithi Timber Co-operative Society Limited Civil
Appeal No. 125 of 1987 (unreported): a written contract cannot be amended by an
implied stipulation unless it can be said to be mutually intended and necessary to give
efficiency to the contract. As per Apaloo J.A: “…no stipulation can be implied in a written
contract unless it can be said to be mutually intended and necessary to give business
efficacy to the contract.”

The Government of the United States of America v Joseph Muiruri Githongo

[2000] eKLR:
Facts: The Government of the USA had entered into a lease purchase agreement for the
use by USAID with Mr. Githongo. In the agreement, USAID rented two houses and could
exercise the option to buy the houses for a fixed price of KES 6.5m within 7 years of the
beginning of the lease, which was signed in December 1987. As part of the agreement,
USAID would make rent payments to Mr. Githongo’s account at Standard Chartered
Bank, which it was understood as a way to help Mr. Githongo obtain a loan of KES 5m
from the Bank. Despite USAID depositing the rent payments into SCB, the loan
application by Mr. Githongo was declined in February 1988, with the bank citing a credit
squeeze due to Central Bank of Kenya regulatory measures.
USAID exercised its option to buy the property in September 1990 by communicating the
same to the landlord by a letter. However, the landlord refused to honour the agreement.
Mr. Githongo stated that although not “accurately” captured by the agreements, the
purchase option was only to be exercised if the US Government ensured that Mr. Githongo
received a loan from SCB. The US Goverrnment contested this, stating that the agreement
only provided for the deposit of rent payments to Mr. Githongo’s SCB Account.
Held by the CoA: A written contract cannot be varied by an oral implied term, especially
where the oral term is contested. The landlord ordered to transfer the properties to the
appellant within 90 days of the judgment.
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SALE AGREEMENTS
A sale agreement is a contract and one must ensure that the agreement is in tandem with
all the Law of Contract principles of:
- offer and acceptance
- intention to be bound
- consideration exchanging hands
- the contract is certain

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

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

TERMS OF THE SALE AGREEMENT

S.3 (3) of the Law of Contract Act is silent as to the contents of a contract.
The Land Registration (General) Regulations (2017) in Rule 48 incorporate the Law
Society Conditions of Sale in every contract for the sale of land unless the parties expressly
exclude them.
Dharmashi v Abdulrahman (1950) 24 KLR 24
It was held that the vendor must ensure the property must not physically deteriorate and
must manage the property as appropriate (vendor is trustee)
The sale agreement is ordinarily prepared by the Vendors advocate because the vendor
dictates the terms. See:
The vendor’s advocate then sends the draft to the purchaser’s advocate for perusal and
confirmation of the terms in that sale agreement. Prior to drafting one must have obtained
all the details relating to the parties from the vendor.

CONTENTS OF A SALE AGREEMENT

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

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

You must also indicate the position on encumbrances i.e. the property is sold free of
encumbrances- LSK 4.1. If there is an encumbrance, you must indicate who is to service
the loan/discharge the encumbrance. You must state that the purchase price will be used
to offset the balance of the encumbrance/loan. Avoid allowing the clause “sold subject to
all encumbrances…”

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

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

A sale agreement (if the LSK conditions apply) will be completed within 90 days of
obtaining consent. This is a special condition which varies the general conditions of sale.
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General conditions
These are general terms which apply to open contracts with the intention of regulating
the rights of the party e.g. the right to rescind, give notice, take possession etc Any
conditions varying these terms are special conditions.

MODEL SALE AGREEMENTS

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

Definitions and Interpretations

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

Agreement for Sale and interest sold

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

Special conditions
Sui generis clauses
Variation of general conditions

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

Purchase price and Deposit

That is consideration that supports the contract. State it explicitly. If by way of gift, it
should be so stated. It must also state the acknowledgment of receipt of the consideration.
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Deposit is ordinarily 10% of the purchase price and ought to be paid before or on
execution of the contract.
For deposit state when it is to be paid, by who and to whom.

Completion documents
That is the purchaser is to deliver the purchase price and the vendor is to deliver the
completion documents. The date of completion must be stated i.e. time is of essence.
Provide for place of completion usually at the vendor’s advocates office.
Where there is a financier, a professional undertaking is given instead of the
money/cheque.
One also has to state vacant possession- that the property is vacant.
Completion documents include title documents, Clearance and Consent certificates,
executed transfer, photos, consents, stamp duty valuation forms.

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

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

Non merger Clause

The clauses should be read as distinct and separate such that in the event that one is null
and void, it should be severed and will not affect the others.
At completion it was deemed at common law that everything is closed such that if there
were any other agreements they would be closed i.e. do not inherit obligations of the
vendor at the completion of the sale agreement. The agreement does not merge the sale
agreement with the conveyance itself. Read LSK condition 27
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Stamp Duty and other related costs
This is based on the value of the property in question.
Registration charges are paid at the lands registry and are not pegged on the value of the
property. The advocates fees must also be catered for and each party bears the cost of
their own advocates, (if a purchaser is obtaining advances from a financial institution, the
costs are borne by purchaser)

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

LSK condition 14.4
The Purchaser shall pay all applicable stamp duty for the transfer and within the time
stipulated.

LSK Condition 22. PAYMENTS

All payments shall be made in immediately available funds without deduction or set-off
and free of exchange, bank commission and other charges.

Disclaimer
LSK Condition 4.3.1 The Purchaser is deemed to have inspected the Property prior to
signing the Agreement and upon signing of the Agreement accepts the property as it is,
subject to condition 4.3.2
4.3.2 The Parties may agree to have a checklist of such fixtures and chattels forming part
of the Agreement, which checklist should be signed by the Parties and be attached to the
Agreement.
General
One needs to put any general obligations in this clause. One may put saving clauses, how
and when payment is to be made, whether the amount would be net or gross. One may
also include a clause on whether the agreement, if it is to be varied, should be varied in
writing or any other way.

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

Execution
This is the affixation of one’s mark on the document. It may be by way of signature, thumb
print or a duly appointed attorney of a company or by a common seal. The parties have to
authenticate the document. One must state the capacity in which the parties are executing
the document.

DEPOSITS
There is no general law requiring the payment of a deposit. One may argue that a sale
agreement is a contract and for it to be valid there has to be consideration. However, a
sale agreement is only executory and does not require consideration.
However, over the years, parties have always paid a customary deposit (LSK Condition
5.3 10). Ordinarily, the deposit is 10% of the purchase price. One may have a sale
agreement providing that no deposit is required. A deposit is however included by most
conveyancers as a form of commitment and to go round the illiteracy of most court
registrars who will refuse to record a caveat where there is no deposit.

Nature of the deposit

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

Who holds the deposit?

Usually, it is held by either an agent or a stakeholder. When the stake holder holds the
deposit, he holds that money to the order of both the vendor as well as the purchaser.
Even though it is the purchaser who has paid it, it belongs to neither the vendor or
purchaser.
Therefore, if the vendor is unable to complete the money should be returned to the
purchaser in full without any deductions and with possible interest. If the vendor
completes, then the money is paid to him. If the purchaser defaults, the money is paid to
the vendor.

Qn: What happens if the stakeholder mishandles the deposit or becomes insolvent?
NOTE: It becomes an issue of agency and the person who appointed the stakeholder
suffers the consequences:
- If vendor, he should complete as well as going after the
stakeholder
- If purchaser, he should pay another deposit

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

COMPLETION AND TRANSFERS

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After investigation of titles and execution of the sale agreement, the next and final stage
is the completion and transfer. The sale agreement is merely executory and it gives no
interest. It will only give you an interest when you are able to complete as the purchaser
(specific performance) and vendor (forfeiture).
To get the interest one needs to register a transfer after paying the requisite stamp duty.
The purchaser needs to also pass some consideration to the vendor. This process of
exchanging of some consideration is called COMPLETION. The vendor completes by
handing over possession while the purchaser completes by giving the balance of the
consideration. This is the final chain of conveyancing. It is however bilateral, concessional
and concurrent. Key phrases on completion are:
1. The date of completion
2. The venue of completion
3. The deliverables (completion documents)
4. The obligations of either parties at completion

Date
1. This will have been provided for in the sale agreement. If not, it is deemed that
completion will take place within a reasonable time from the date of completion.
2. If not provided but LSK conditions (8.1) will apply i.e. to take place 90 after date
of agreement.
The period before completion is very critical because it is the time the parties:
1. Prepare or satisfy their respective conditions and obligations under the agreement
2. The issue of where the risk of property lies arises. The risk should be balanced
between the parties to ensure the property stays intact.

LSK Conditions of Sale 12 on Insurance.

Risk on the Property remains with the Vendor from the date of Agreement and shall pass
to the Purchaser upon Completion or upon Ml Purchaser taking possession of the
Property, whichever is earlier. However, if the property is insured, even if there is damage,
the purchaser cannot rescind, he must complete.

Time For Completion:

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Barclay v Messenger (1874) 43 LJ Ch 449

Contract simply provided that if purchaser failed to pay balance of purchase price on a
given date the agreement would be null and void. The Purchaser asked for an extension
of time, to which the Vendor agreed. The purchaser did not meet the extended deadline
for payment and the vendor rescinded the agreement. The purchaser sued the vendor
arguing that the extension had not incorporated the earlier term as to time being of the
essence.
Jessel MR held: time was of the essence, stating that there was no better way of strongly
expressing that fact than as had been provided. Performance within the extended time
meant that time was of the essence.

LSK Condition 13. When time is not of essence, failure to complete on completion date
does not entitle the aggrieved party to rescind the agreement. He can only do so after
issuing a completion notice to the party in default. The notice to complete, the moment it
is issued it makes time of the essence.

Graham v. Pitkin [1992] 2 All E. R. 235:

“Unreasonable delay by a purchaser in completing a contract for the sale of land does
not entitle the vendor to rescind the contract without first serving a notice to complete,
although delay may be an ingredient in deciding whether a party in default does not
intend to proceed and has repudiated the contract”

NJAMUYA V NYAGA [1983] KLR 282 (affirmed in David Moses Gekara v

Hezron Nyachae [2012] eKLR):
“….where it was emphasized that in case where it is not stipulated in the contract that
time is of the essence, the notice must be given to the defaulting party and that notice is
what will make time to be of essence. It is also clearly stated there that the notice must
also give a defaulting party a reasonable time within which to rectify the default.”

Housing Company of East Africa Limited v Board of Trustees National Social

Security Fund & 2 others [2018] eKLR
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The contract did not initially include a clause as to time being of the essence. The contract
also incorporated the 1989 LSK Conditions of Sale. It at first stipulated that the Purchaser
pay a deposit on or before the time of execution and then pay the balance of the price
within 180 days of execution. The Purchaser paid the deposit and some of the purchase
price. He asked for two extensions of time (90 days then 60 days). The Vendor agreed to
both, but made it clear, in agreeing to the second extension of time, that time was of the
essence and that failure to pay by the end of the extension date would entitle the Vendor
to rescind the contract and keep the deposit paid as damages. The Purchaser did not pay
in time, the Vendor rescinded and offered the suit premises to a third party, which led the
Purchaser to sue the Vendor for breach of contract, arguing that the Vendor had not
issued a completion notice as per the LSK Conditions of Sale.
Held at the CA: the second extension of time had expressly included a term as to the
essence of time in the contract. Thus, the Vendor was not required to issue a completion
notice at the end of the period and was entitled to not only rescind the contract and offer
the premises to a third party but also keep the deposit as damages.

For the notice to be effective, the following conditions must be observed:

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

Completion venue
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8.2.1 Where the Agreement specifies the time and place of Completion, Completion must
take place at the time and place specified.
8.2.2 Where the Agreement does not specify the time and place of Completion,
Completion should take place either at the Vendor’s Advocate’s office or any other venue
that may be agreed by the Parties, noting that if the parties do not agree on an alternative
venue, completion must take place at the Vendor’s Advocate’s office or at the last physical
address of the Vendor’s Advocate as supplied to the Law Society of Kenya.
8.5.1 Unless agreed otherwise by the Parties, registration of the Transfer shall be
undertaken by the Purchaser’s Advocate.
7.5.1 The Property is sold subject to all necessary consents being obtained. The Vendor is
responsible for obtaining all consents and the Purchaser shall, where required by law or
by the practice obtaining, join in making any application.
7.5.2 Where the sale is free from encumbrances the Vendor is responsible for obtaining
the discharge of any encumbrance at the Vendor’s cost. NOTE – If you get a power of
attorney from the vendor you will be able to deal with the property pending registration
of the Transfer. Therefore include this power of attorney as a deliverable document in the
sale agreement
In postal completion, vendor’s lawyer becomes the purchaser’s advocates agent i.e. he has
the duty to inspect the completion documents and confirm that they are in order and
registrable and the cheque for the purchase price can now be given to the vendor (i.e. the
cheque was in vendor’s advocates possession)
5.2.1 The Purchase Price or any part thereof including the Deposit is to be held by the
Vendor’s Advocate or auctioneer (in the case of auctions) as stakeholder and if demanded
by any party in an interest earning account and the principal and Accrued Interest will be
dealt with in the manner set out in the Conditions and the Agreement.
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PARTS OF A DOCUMENT

“Document” refers to a charge, lease or transfer. Under s. 7(5) of the Land

Registration Act requires that registration of dispositions is done by registration of
prescribed forms. Thus, under S.43 (transfers), s.50 (transmissions), s.79
(charges), s. 85 (discharges) of the Land Act, amongst others, require that
prescribed forms must be used. Generally, however, a document under the LRA
has the following parts:

1. Commencement

The document contains a heading which states the nature of the transaction and
the title of the property. E.g.

"CHARGE”

"TITLE NUMBER……"

(a) Nature - It states the nature of the document. Each document describes itself,
e.g. "THIS LEASE", "THIS CHARGE”, “THIS TRANSFER” etc.

(b) Date - It also contains the date of the document - i.e. the date of execution.
Where the date is omitted or a false date is inserted, this does not invalidate the
document. Evidence may be adduced to explain the correct date.

The date is important especially where certain statutory provisions must be

complied with within a specified period e.g. under the Stamp Duty Act - certain
documents must be stamped within 30 days from the date of execution.

Note:
 KLAW 421 CONVEYANCING LAW AND PRACTICE

The date of the document appears towards the end of the document but before the
signatures of the parties.

(c) Parties - These are the signatories to a document. They include, inter alia,
natural persons and companies as well as any body that has legal personality.
Names should be stated in full. Where a name differs from that given in an earlier
document, it is advisable to draw attention to the discrepancy. This may be done
by including a statement when reciting the earlier document to the effect that the
person was referred to using a different name.

At other times, especially, in a transfer of land, it may be necessary for the person
with the different name to swear an affidavit stating that he is the same person
referred to in the previous document.

The names or particulars of the second party do not immediately follow those of
the first party. The various parties who join in the document are expressed to be of
separate parts. E.g. XYZ of the First Part, ABC of the Second Part and DEF of the
Third Part. The Parts tell us that the document is between two or more parties.

In the case of third-party charges lenders sometimes insist that the Borrower be
joined as a third party.

2. Recital

This is a descriptive part. It is divided into two sub-parts and normally begins with
"WHEREAS".

(a) Narrative Recital - states 2 things:-

i) Nature of the proprietor's interest - i.e. How the proprietor holds the land,
e.g. Freehold or leasehold.

ii) History of the property - i.e. the events which have taken place in relation
to the property upto the time in question.

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 KLAW 421 CONVEYANCING LAW AND PRACTICE

(b) Introductory Recital - indicates the intended operation of the document. It

states what the parties have agreed to do, e.g. "The Vendor has agreed with the
Purchaser for the sale to the Purchaser of the property known as L.R. No…” It
explains the purpose of the document.

Effect of Recitals

A narratives recital may operate by way of estoppel against the person making it.
E.g. Where A purports to dispose of a piece of land to which he has no title, he will
be estopped from denying that he has title to the property, for if he subsequently
acquires title to that land, he will be compelled to transfer the land in favour of the
transferee.

Narrative recitals may also be used to assist in the construction of the parcels
clause which deals with the physical description of the property.

3. Operative Part

Generally, it begins with the part of the deed called the Testatum.

(a) Testatum

It begins with the words "NOW THIS DEED WITNESSETH" or "NOW THIS
LEASE WITNESSETH" etc.

(b) Consideration

The consideration must be stated. S.10 of the Stamp Duty Act - requires that all
matters and circumstances which affect the liability of any instrument to stamp

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 KLAW 421 CONVEYANCING LAW AND PRACTICE

duty be fully stated in the instrument to be stamped. Consideration is one such

matter.

In the case of a transfer by way of gift, the document normally states that the
transfer is made in consideration of natural love and affection which the Donor has
for the Donee.

How does lack of consideration affect the transfer?

(i) In the absence of consideration, a resulting trust may arise in favour of the
transferor unless it is in favour of a wife in which case it would be presumed to be
an advancement. This is the general rule in voluntary transfers.

(ii) The remedy of specific performance would not be available to a transferee who
has not paid consideration. Reason: The Vendor's covenants title are implied only
if there is valuable consideration.

(c) Receipt Clause

In a transfer the receipt clause states "the receipt whereof the vendor hereby
acknowledges." This operates as a sufficient discharge on the part of the person
paying the consideration without the necessity of giving a further receipt.

Note, however, that the clause is not conclusive evidence of payment and equity
will always permit proof of non-payment. To a subsequent purchaser without
notice of non-payment, however, the receipt clause operates as conclusive evidence
of payment.

(d) Parcels Clause

This begins with the words "ALL THAT'. The clause gives the physical description
of the property. Where parcels are lengthy, they are normally set out in the
schedule to the document.

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The description should, if appropriate, be the same as in earlier documents.

However, if the old description in earlier documents is insufficient to identify the
property concerned, e.g. because of a subsequent change in the nature of the
property such as sub-division or re-building or a change in the surrounding
circumstances such as new roads then a new description should be framed so that
both the old and new descriptions are incorporated into the instrument. For these
reasons, great care must be taken in describing the property.

(e) Habendum

It commences with the words "TO HOLD'. It describes the interest created. It
defines the estate conveyed to the transferee or purchaser. It defines the quantum
of the interest created.

In a lease, the term of the lease is set out here. Any exceptions and reservations
are also set out here.

In a Charge, the Habendum may read as follows: “The Chargor HEREBY

CHARGES the said piece of land in favour of the Chargee...”

(f) Reddendum

This appears in Leases only. It begins with the words "YIELDING AND PAYING".
This part explains the amount of rent payable by the tenant as well as how and
when it is to be paid. This is where the operative part ends.

4. Covenants

This part may begin with the words, “The Lessor hereby covenants that…”. The
covenants to be included in a document are a matter of contract and agreement

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between the parties. Covenants will only be implied by law in the absence of an
agreement to the contrary by the parties.

5. Testimonium

This begins with the words "IN WITNESS WHEREOF…". This part links the
preceding parts of the document with the seals and signatures of the parties.

6. Execution

This is where the parties affix their seals and signatures. The signatures and/or
seals of the parties appear immediately after the date of the document. Note special
execution requirements for a Transfer under the LRA.

7. Attestation Clause

This is where the witnesses sign. Under the LRA attestation is coupled with the
additional requirement of verification. This is provided for in Section 44 of the
Land Registration Act No.3 of 2012.

Note special execution, attestation and verification requirements

under Section 44 of the Land Registration Act No. 3 of 2012.

CONSTRUCTION OF THE PARCELS CLAUSE

A problem requiring interpretation or construction of the parcels clause may arise

where an instrument contains more than one mode of description of the property
and the descriptions are contradictory. The court has to determine which of the

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two descriptions prevails. It may be necessary to look outside the document to

determine the extent of the land transferred, leased or charged.

There are several rules governing the construction of the parcels clause.

1. "Falsa demonstratio non nocet cum de corpore constat"

Where there is more than one description (whether including a plan or not), the
court will apply the maxim to reject any description which is manifestly inaccurate.
"The erroneous description will be rejected as a false demonstration". See:

Maxted v. Plymouth Corporation (1957) CLY 243

The Court of Appeal rejected a plan which, clearly inaccurately, excluded

from the conveyance a strip of land adjoining a road, which strip was
included in the Contract of Sale.

Gitwany Investments v Taj Mall Ltd.

The Court rejected a description in the title of Taj Mall Ltd that described
the land’s block number as belonging in Machakos County as false.

Rose Wathiru Waruinge v John Njenga Kimani [2006] eKLR

In this case, the Defendant had failed to transfer land to the Plaintiff who
had proved herself (and her deceased husband) always ready to complete
the transaction. The contract for sale had indicated that 3 acres of the
Defendant’s land were to be hived off and transferred to the Plaintiff.
However, during a correspondence between the parties, the Plaintiff’s
lawyer had erroneously referred to the acreage as 2 acres. Ojwang J. (as he
then was ruled the following:

‘Several documents may be said to carry the contractual intent between

the parties, and the primary one is clearly the duly-signed agreement of
18th February, 1991. The letter written on behalf of the plaintiff, by M/s.

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Wanjama & Co. Advocates, dated 30th August, 1995 indeed refers to two
acres as the portion of the defendant’s land to be transferred to the plaintiff
under the sale agreement. That discrepancy is, in my view, a trivial one;
and besides, ignoring it would find legal validity in the well known
principle, falsa demonstratio non nocet – a false description does not
vitiate a document. The written agreement of 18th February, 1991
describes the area of land to be conveyanced to the plaintiff with sufficient
certainty, and so the untrue part will be rejected or ignored. The defendant
in his evidence had confirmed the foregoing position:

“That is my land; and it is out of that very land that I had wanted to sell
three acres to the plaintiff.”’

2. Recitals

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

3. Extrinsic Evidence

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

ambiguity or inconsistency or contradiction in the document.

4. Plan or Map

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

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(a) The words "more clearly described in the plan" would indicate that the plan
is meant to prevail over any deficiencies in the verbal description. See:

Eastwood v. Ashton (1915) AC 900

A contract described the property and referred to a plan attached. The

conveyance used four indications: the farm sold was said to be called by a
given name, to contain 84 acres odd ‘or thereabouts’, and to be in the
occupation of two different tenants as to different parts, and it was more
particularly described and ‘shown for identification purposes only on the
plan attached.’

Held: The plan prevailed, because only the land occupied by one of the
tenants was known by the name stated, the acreage was approximate (and
the area in dispute was only one twelfth of an acre), and the other tenant
was no longer in occupation (having sublet), so that none of those three
factors in the description was reliable.

Per Earl Loreburn: ‘We must look at the conveyance in the light of the
circumstances which surrounded it in order to ascertain what was therein
expressed as the intention of the parties.’

(b) The words "for the purposes of identification only" in relation to a plan
would clearly indicate that the verbal description is paramount and the plan is only
illustrative.

Note, however, that where the words used are "for the purposes of identification
only" and the verbal description is unclear, the plan can be referred to in order to
determine the extent of the land conveyed. See:

Wiggington and Milner v. Winster Engineering [1978] 3 A11ER

436.

The court was asked to construe a conveyance where the plan attached was
referred to using the phrase ‘for the purposes of identification only’ and also
the phrase ‘more particularly delineated’.

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Per Buckley LJ: ‘in so far as the plan does not conflict with the parcels, I
can see no reason why, because it is described as being ‘for identification
purposes only’ it should not be looked at to assist in understanding the
description of the parcels. The process of identification is in fact the process
of discovering what land was intended to pass under the conveyance, and
that is the precise purpose the plan is said to serve. Accordingly, so long as
the plan does not come into conflict with anything which is explicit in the
description of the parcels, the fact that it is said to be ‘for the purposes of
identification only’ does not appear to me to exclude it from consideration
in solving problems which are left undecided by what is explicit in the
description of the parcel’.

Per Buckley LJ : ‘… so long as the plan does not come into conflict with
anything which is explicit in the description of the parcels, the fact that it
is said to be ‘for the purposes of identification only’ does not appear to me
to exclude it from consideration in solving problems which are left
undecided by what is explicit in the description of the parcel’.

5. Presumptions

The courts apply certain presumptions to aid them in the construction of the
parcels clause.

Example:

Where the boundary is delineated by a hedge and a ditch, there is a presumption

that the boundary is on the opposite side of the ditch away from the hedge. See:

Vowles v. Miller (1810) 128 ER 54.

Per Lawrence J: ‘The rule about ditching is this. No man, making a ditch,
can cut into his neighbour’s soil, but usually he cuts it to the very extremity
of his own land: he is of course bound to throw the soil which he digs out,
upon his own land; and often, if he likes it, he plants a hedge on the top of
it.’

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Alan Wibberley Building Ltd V Insley: (1999) HL 24 MAR

The parties disputed ownership of a strip of land between a garden and a

farm. The land was registered. There was a hedge and a ditch along the
disputed boundary, it had been conceded in the Court of Appeal that a
conveyance of land on the hedge side of the ditch transferred land only up
to the middle of the hedge, whereas the application of the hedge and ditch
rule suggested that the seller owned the strip between the hedge and the
other side of the ditch.

Per Lord Hoffmann: “The language is confusing. The land is said to be

"more particularly" delineated on the plan but, almost in the same breath,
the plan is said to be "for the purposes of identification only." It goes on to
say that the land is "more particularly described" by reference to the
Ordnance Survey field numbers. I would regard this language as in itself
fairly inconclusive as to whether the parties intended the boundary to be
in the precise place which the Ordnance Survey map represented, namely,
in the middle of the hedge… The more likely inference, which the words "for
the purposes of identification only" support, is that the parties were using
the Ordnance Survey plan in the same way as it is used in registered
conveyancing, that is, to indicate the general boundaries. This would leave
the hedge and ditch presumption undisturbed,

PROFESSIONAL UNDERTAKINGS

LSK Code of Standards of Professional Practice and Ethical Conduct (par. 134)
defines an undertaking as a formal promise whose effect is to make the person
giving it responsible for the fulfillment of the obligations in respect to which it is
given.

The Encyclopedia of Forms and Precedents defines it as “Any unequivocal

declaration of intention addressed to someone who reasonably places reliance on

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it and made by a solicitor in the course of his practice, either personally or by a

member of his staff under which the solicitor becomes personally bound.”

An Advocate’s undertaking is a personal promise as well as a professional and legal

obligation. It is based on the concept of the legal profession as an honorable
profession and the expectation that an honorable person will keep (honor) his/her
word.

Domb v Isoz (1980) 1 KB 76 at 81: Templeman LJ expressed the importance of

professional undertaking in conveyancing as follows:

‘Conveyancing is a complicated business. A chain of transactions is frequently

involved where no vendor will sell until he can purchase and no purchaser will
buy until he can sell. Each client as vendor and purchaser needs time to make up
his mind and change his mind after studying surveys and legal reports and other
related matters and each client expects everyone else to be ready when he is
ready. Skillful conveyancers are required to forge the chain, to see that no
bargain is lost and that no one is left without a home. Binding and enforceable
undertakings between professional men play an essential part at different stages.
Mistakes are bound to occur occasionally and each client must be protected by
the insurance of his solicitor against financial loss, even though damages will
never fully compensate a client for the loss of a bargain or the loss of a home.’

Regulation 14 of the Advocates (Professional Conduct) Regulations states

categorically that an advocate shall not:

1. give any undertaking to another advocate or any other person knowing that he or
she has no authority or means of satisfying the undertaking; and
2. knowingly breach the terms of an undertaking

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In practice, these are mostly used in Conveyancing transactions where the

Purchaser releases the balance of the purchase price to their advocate pending
completion of the Vendor’s obligations / duties. The advocate acting for the
Purchaser is supposed to ‘hold’ the money and only release it upon receipt of the
completion documents form the Vendor’s advocates and successful registration of
the Conveyance in favour of the Purchaser. The advocate therefore plays the role
of a trustworthy middleman to ensure that the Vendor actually meets their
obligations in the Conveyance while the buyer actually meets their financial
obligations and that no one dupes the other.

Another common example is where a purchaser is being financed by a bank, the

bank will ordinarily not release funds until the transfer and charge have been
registered against the relevant property, which is being acquired. The Vendor also
needs an assurance that once they transfer the property and a charge is successfully
created over it, the purchaser and the bank will release the funds to him. The
advocate acting for the bank will normally give an undertaking stating that once
the transfer and charge have been registered, the funds will be remitted to the
vendor.

Having understood that, then the rationale for the rule is to enforce public
confidence in the legal profession in that an advocate can be trusted to keep their
word; contrary to which, their reputation as well as that of the whole legal
fraternity is put to question not to mention the fact that their client’s interests are
jeopardized.

This view is lent judicial support by the pronouncements of the court in the case of
PETER NG’ANGA MUIRURI V CREDIT BANK AND CHARLES AYAKO
NYACHAE T/A NYACHAE & CO. ADVOCATES Civil Appeal No. 263 of
1998 (Court of Appeal at Nairobi). In this case, the appellant sought to
enforce an alleged undertaking given by Messrs. Nyachae & Company Advocates
to another firm, Messrs F.N. Wamalwa & Co. Advocates, for the payment of the
suit sum plus interest thereon. The suit sum was to be held in a joint interest

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earning account. Subsequently, the firm of Nyachae and Company breached its
professional undertaking by failing to deposit the said money in a joint interest
earning account, principally on the ground of a collateral dispute as to the meaning
and purport of the undertaking and the amount. The Court in issuing an order
against the firm to deposit the amount to the bank within 30 days stated that,

‘An undertaking is a solemn thing. In enforcing undertaking the court is

not guided by considerations of contract, but the court aims at securing
the honesty of its officers.’

Similarly, the Kings Bench Division of the English High Court in the case of
United Mining and Finance Corporation Ltd v Beecher (1910) 2KB 296
(Hamilton J) while referring to the decision of Coleridge J in the case of Re
Hillard,145 stated:

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

Meanwhile, it is important to note that an undertaking is not a matter collateral to

a land transaction. While it enables a land transaction and creates trust enabling
the parties to a contract for the sale of land to proceed without fear of fraud, it is
not itself tied to the contract between the parties or to the contractual property. It
is a matter of a promise between advocates, and is therefore enforced by courts as
a matter of discipline of its officers. Thus, it is not necessary that the matter is filed
in an Environment and Land Court. See: WARUHIU K’OWADE & NG’ANG’A
ADVOCATES V MUTUNE INVESTMENT LIMITED[2016] eKLR- while
deciding on an appeal over enforcement of an undertaking, the Court of Appeal
stated as follows:

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“The issue in dispute is fairly simple and straight forward. The matter
involves the extent, intent, purpose and objective of a professional
undertaking given by an advocate in satisfaction of a condition precedent
for obtaining documents and permission from the bank, which was
holding the titled documents needed for the conclusion of a sale
transaction. We start by asking what constitutes a professional
undertaking.

“Our answer is that a professional undertaking is an unequivocal promise

made by a party to another either to do or to refrain from doing something
or acting in a manner which may prejudice the right of the opposite party,
to which liability may attach. See Equip Agencies Limited v Credit
Bank Limited [2008] 2 EA 115 (HCK). Generally speaking, professional
undertakings are given by advocates in order to make transactions easier,
faster and more convenient. Where an advocate breaches a professional
undertaking, the court has jurisdiction to order the enforcement of that
undertaking.

“In enforcing undertakings, the court is guided not by the considerations

of contract, or of securing the legal rights of parties, but mainly by
ensuring the honesty of advocates.”

The same was held in JOEL KYATHA MBALUKA T/A MBALUKA &
ASSOCIATES ADVOCATES V DANIEL OCHIENG OGOLA T/A OGOLA
OKELLO & CO ADVOCATES [2019] eKLR. In this matter, Mr. Mbaluka,
represented National Bank of Kenya (NBK) which had issued loans amounting to
KES 6.8m against a charge on a client’s land (M/s Kemunto). M/s Kemunto was
seeking to sell the property to a M/s Riria, represented by Mr. Ogola. Mr. Mbaluka
issued a professional undertaking that within 30 days of receipt of the full purchase
price of KES 6.8m, he would deliver all the completion documents to Mr. Ogola,
which completion documents included the original title deed over the property,
duly executed transfer forms, discharge of charge and consent forms. Mr. Ogola

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transferred the full purchase price for his client on the strength of that
undertaking, but Mr. Mbaluka failed to deliver the completion documents within
the 30 days. Mr. Ogola sued Mr. Mbaluka for failing to honour his professional
undertaking at the High Court. Mr. Mbaluka held that M/s Kemunto had another
unsatisfied unsecured loan for approximately KES 700,000/-, and as such, the
bank could not let go of its only security. The Court of Appeal upheld the High
Court’s decision that it had jurisdiction over the matter stated as follows:

“… professional undertaking in a legal transaction is a separate contract

between advocates that creates legal obligations anchored on professional
relationship and etiquette between the advocates. It creates an
independent cause of action separate from the transaction undertaken by
the advocates’ clients. …

“[15] The dominant issue in the dispute that was before the learned Judge
was the honouring of the professional undertaking, and not the land
transaction between the advocates’ clients. The undertaking had nothing
to do with the environment, or the use and occupation of land, or title to
land. The land transaction that the advocates’ clients were engaged in was
not in issue. The learned Judge therefore properly rejected the application
to have the respondent’s suit transferred to the ELC.”

An interesting point to note is that where an advocate fails to honour his

undertaking, it is not an excuse that his client failed to place him in funds. This was
the Court’s holding in the case of Kenya Re-insurance Corporation v. V.E.
Muguku Muriu, Civil Appeal No. 48 of 1994 (Court of Appeal at
Nairobi). The Court of Appeal stated that such an order will be granted where the
undertaking in question is clear, unambiguous, certain and without any conditions
precedent. Further the court also clarified the fact that an undertaking once given,
can not be watered down by way of reference to collateral issues.

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In most instances practically, banks will not agree to deposit funds with their
advocates to issue an undertaking which then puts the advocate between a rock
and a hard place.

LSK Condition 8.3.1 On the Completion Date, the Purchaser shall produce
documentation evidencing payment of the balance of the Purchase Price either as
follows:

(a) Payment in net cleared funds to the Vendor’s Advocates nominated bank
account by way of RTGS no later than three (3) Business Days prior to the
Completion Date to be held by the Vendor’s Advocates as stakeholders pending
Completion; or

(b) An irrevocable professional undertaking securing payment by the financier’s

advocates in a form and substance satisfactory to the Vendor’s Advocates.

Housing Company of East Africa Limited v Board of Trustees National

Social Security Fund & 2 others Civil Appeal 267 of 2016 [2018] eKLR:
where use of a professional undertaking is attempted to complete payment of the
transaction, it must have been agreed to by the parties, and must secure payment
for the vendor by the completion date (or by a specified date contemplated by the
parties). It cannot be a blanket professional undertaking.

Failure to honour a professional undertaking is evidence of professional

misconduct and disciplinary action can be taken against the defaulting advocate
where the Tribunal may, in accordance with Section 60(4) of the Advocates Act
order:

(a) that such advocate be admonished;

(b) that such advocate be suspended from practice for a specified period not
exceeding five years; or

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(c) that the name of such advocate be struck off the Roll; or

(d) that such advocate pays a fine not exceeding one million shillings; or

(e) that such advocate pays to the aggrieved person compensation or

reimbursement not exceeding five million shillings,

or such combination of the above orders as the Tribunal thinks fit.

Drawing authority from case law, a professional undertaking is enforceable and

the Court can make orders that a defaulting party honours its undertaking
pursuant to Order 52 Rule 7 of the Civil Procedure Rules 2010 as seen in the case
of Nelson Andayi Havi t/a Havi & Company Advocates v. Jane Muthoni
Njage t/a J.M Njage & Company Advocates [2015] eKLR:

The foregoing arguments by the parties who are advocates are eminently
powerful. But one thing is not in doubt; that a professional undertaking
given by advocates is separate and distinct contract which is enforceable
between the parties. The respective clients of the advocates in the
undertaking are not parties in the undertaking. Therefore, only the
advocates as the parties in can enforce the undertaking. There is ample
judicial decision on this point and I do not wish to multiply them. Like
Njagi J in the case of David Karanja Thuo vs. Njage Waweru HCC
No.209 Of 2008 (OS) I say;-
“In the first instance, it should be noted that the professional undertaking
was between the advocates and none of the clients was a party to such an
undertaking”.

Delayed discharge of the professional undertaking may result in payment of

interest by the defaulting advocate. It is important to note that a professional
undertaking is a separate and distinct contract which is enforceable between the
advocates. The advocates’ clients are not privy to this contract.

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REQUIREMENTS RELATING TO VARIOUS DEALINGS IN LAND

EXECUTION OF DOCUMENTS AND ATTESTATION OF SIGNATURES

Execution - means signing of documents

Attestation – means witnessing the signing of documents

1. Documents executed in Kenya

i) Land Registrar
ii) Judge or Magistrate
iii) Registrar or Deputy Registrar of the High Court
iv) Registrar-General, Deputy Registrar-General and any Assistant Registrar-General
v) Administrative Officer
vi) Superintendent of Prisons
vii) Advocate
viii) Bank Official

2. Documents executed in the Commonwealth

i) Judge or Magistrate
ii) Justice of the Peace
iii) Notary Public
iv) Commissioner for Oaths
v) Administrative Officer

3. Documents executed in a Foreign Country

i) Notary Public
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ii) British Consular Officer or Proconsul or such other person or class of persons as the
Minister may determine.

LAND REGISTRATION ACT NO. 3 OF 2012

Section 44 – Execution of instruments in writing

S.44(1) – Each party to sign
S.44(2) - Execution – signature, thumbprint or other mark
S.44(3) – Witness – Advocate of the High Court of Kenya, Judge or Notary Public
S.44(4)(a) – Instrument executed in the Commonwealth – attestation is by Judge, Magistrate,
Notary Public, Commissioner for Oaths
S.44(4)(b) – Instrument executed in a foreign country outside the Commonwealth – attestation is
by a notary public or any other person as the Cabinet Secretary may prescribe
S.44(5) – ID or Passport, PIN, Passport Photos, Marriage Certificate where applicable

S.45 – Verification of execution – completion of certificate

S.56(1) – for Charges – special acknowledgement by the Chargor.

STAMP DUTY

(Stamp Duty Act, Chapter 480, Laws of Kenya)

The Stamp duty is one of the oldest taxes on documents. The core of the Act (s.5) is that every
instrument specified in the Schedule to the Act, wheresoever executed which relates to property
situated or to any matter or thing done in Kenya shall be chargeable with stamp duty specified in
the Schedule. The only exceptions are those instruments that are exempt under the Act or any other
written law. The Act sets out clear provisions on the procedure and provisions applicable to
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instruments that require stamping. The charging of stamp duty on all transactions specified in the
Act is a mechanism for the Government to generate income. Stamp duty is therefore a source of
revenue for the Government.

Stamp duty applies to various transactions conducted by persons in respect of property in Kenya.

The Act defines “stamp” as a stamp embossed or impressed by means of a die or an adhesive
stamp. The requirement that stamp duty with which instruments are chargeable be denoted by an
embossed stamp on their instrument is contained in Regulation 2 of the Act. Prior to amendment
of the Regulations vide Legal Notice No. 18 of 1993, save for the instruments specified in the First
Schedule to the Act, there was a mandatory requirement to have revenue stamps impressed on the
instruments by an embossed stamp. The 1993 amendment extended the provision of franking to
the instruments in the Fourth Schedule to cover ‘instruments upon which stamp duty may be paid
and denoted by instrument requiring or capable of registration, being an instrument relating to the
registration of transactions or devolution affecting land registered under any law relating to the
registration of land. (Ojienda, 2007, 86)

[Link]
What instruments are assessed for Stamp Duty?
• All land transactions involving change of ownership either through valuable consideration,
gifts or partition of land attract stamp duty except where specifically stipulated by the law.
• Charges, Mortgages and debentures.
• Bonds, consultations, deeds, Easements, general and specific power of Attorney, Variation
of a Document, Commissioner of Oaths, Deed of indemnity, Guarantee, instruments under
the chattels Transfer Act i,.e Chattels Mortgage, R.L 19, R.L 7, R.L 57,Assents, Mining
Contracts
• City Council Leases are assessed at 60 pounds.
• Deed of Partition is assessed at two (2) percent of the lower value. To convert the value to
Kenya pounds its divided by 20.
• Partnership Deed is assessed at fifty (50) pounds.
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• Agreements pursuant to a power of Attorney is assessed at five (5) pounds on the agreement
and four (4) percent of the consideration on the power of attorney.

• Surrender, revocation of power, supplemental charge, and partial discharge is assessed at

one (1) pound.
• Increase of nominal capital is assessed as 1 percent of the increased amount.

Stamp Duty exemption may be obtained for transactions, including but not limited to:
• Transfer of land to charitable organizations as gifts.
• Transfer of property between spouses.
• Transfer of family property to the members on demise of a family member in whose name
the property was registered.
• Transfer of land from a Holding Company and its Subsidiaries where the holding company
owns not less than ninety percent (90 %) of the shares of the subsidiary, etc.
• Transfer of family property to a company wholly owned by the same family (By virtue of
Legal Notice Number 92 of 2007 issued pursuant to section 106 of the Stamp Duty Act).

S.6 – Provides that documents executed in Kenya and which require stamping must be stamped
within 30 days of execution. For documents executed outside Kenya, Stamp Duty must be paid
within 30 days of receipt of the documents in Kenya.

[Link]
taxes/companies-partnerships-file-pay
How do I pay Stamp Duty?
1. Present the legal instrument for assessment.
2. Go to the KRA Website, itax and print the Payment slip.
3. Make payment at a KRA appointed bank.
4. Present the copies of Payment slip and banking slip for confirmation of payment.
5. After confirmation present the legal instruments for franking.
6. Collection of the franked documents ready to be presented for registration.
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Section 7 - States that all duties with which instruments are chargeable shall be paid and denoted
upon the instrument by means of stamps.

S.19 - A document which requires to be stamped but which is not stamped cannot be produced in
evidence in court in civil proceedings. Exceptions: (a) Criminal proceedings (b) civil proceedings
by a collector to recover stamp duty.

In Weetabix Limited vs Healthy U (2006) eKLR, the plaintiff therein produced, as an exhibit, an
assignment that had not been stamped. Hon. Justice Anzangalala, as he then was, citing the
provision of section 19(1) of the Stamp Duty Act proceeded to expunge the assignment as an
exhibit.

The Court of Appeal has considered similar issues regarding non-payment of the stamp duty. In
Abok James Odera t/a A.L. Odera & Associates vs John Patrick Machira t/a Machira & Co.
Advocates [2013] eKLR in a judgment delivered on the 11th October, 2013 considered the effect
of sections 19(3)(a), (b) and (c), 20 and 21 on stamping of agreements in the Stamp Duty Act. The
Court ordered that the "respondent be and is hereby directed to submit the agreement of 4th March,
1996 to the stamp duty collector for assessment of the duty payable, which should be paid in the
normal manner" page 9 of the eKLR report the Court said:-

"…We are in agreement that the agreement of 4th March, 1996 though subject to the stamp duty
act (supra) and that duty is payable on it, it does not fully comply with the above provision, but
such noncompliance is not however ….. to the enforcement of the agreement….. the court is
enjoined under section 19(3) (a)(b) and (c) not to reject such an agreement in totality, but to receive
and either assess the stamp duty itself and direct that it be paid. ……….alternatively the court can
impound such an agreement and direct that it be delivered to the stamp duty collector for him to
assess the stamp duty payable and demand its payment. There is also provision for payment for
waiver penalties on late payment of duty as the stamp duty collector may direct at …… discretion.
The stamp duty collector also has a discretion to extend time with which the stamp duty assessed
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should be paid where he is satisfied that the omission or neglect to pay stamp duty was not form
intention to evade payment of stamp duty or otherwise to defraud the Authority concerned. The
stamp duty collector also has a discretion to charge additional stamp duty on top of what may have
been assessed as stamp duty payable on the such agreement. There also a safety value vide which
the defaulter has a right of appeal to the relevant minister against the collection directive on the
payment of the stamp duty assessed additional stamp duty assessed and penalties imposed…. What
the learned trial Judge should have done and which we are also mandated to do …… a first
appellate court, is simply to impound the said agreement, either assessed duty ourselves, collect it,
and then forward the duty collected to the stamp duty collector for purposes of assessment and
payment of the resulting duty payable."

In Mwanahamisi Omar Mzee Also Known as Fatuma Mohamed Ali Omar v Chengo Kahindi
Birya & another [2018] eKLR (Mombasa High Court Civil Appeal No.107 of 2016) Honourable
Mr. Justice Majanja confronted an objection to receiving an agreement in evidence because it was
not stamped. At paragraphs 10 and 20 and 21 of his judgment he said:-

"19…The purpose of the Stamp Duty Act is to ensure collection of revenue and not necessarily to
deprive the party of a cause of action. I hold that such an objection should be raised at the earliest
opportunity to enable the party relying on the document comply with the provisions…

“21. The decision I have cited accords with the provisions of Article 159(2d) of the Constitution
which requires the court to do substantive justice without undue regard to technicalities. The
Constitution underpins the overriding objective in sections 1A and 1B of the Civil Procedure Act
(Chapter 21 of the Laws of Kenya) which imposes on the parties and their advocates to assist the
court in ensuring substantive justice is achieved.”
In James Maina Muriithi vs My Beauty Transporters Limited & others [2018] eKLR (Nairobi
Milimani High Court Civil Suit No.262 of 2014) Honourable Mr. Justice Richard Mwongo faced
an objection to some receipts that were not stamped under the Stamp Duty Act in final written
submissions. The Judge analysed the law; cited Suderji Nanji Ltd vs Bhaloo (1958) EA 762
and Bagahat Ram vs Raven Choud (2) 1930 A.I.R Lah 854 and followed Majanja J
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in Mwanahamisi Omar Mzee Also known as Fatuma Mohamed Ali Omar vs Chengo Kahindi
Birya & another [2018] eKLR noting thus:-

"I agree with the plaintiff’s counsel that the defendant ought to have raised the issue well before
final written submissions were filed. However, the law is also clear that under sections 19(3) and
20 of the Stamp Duty Act, there is a statutory right availed for unstamped documents to be stamped
out of time, for payment of requisite penalties, and thereafter for them to be relied upon. I am
prepared to go this route."

The learned Judge went that route and at paragraph 56 of his judgment he ordered-
"56. Applying the above provision, I will order that subject to the plaintiff effecting the payment of
stamp duty on the unstamped receipts, evidence of which shall be produced to the Registrar of the
High Court within forty five days from the date of this judgment, the amount of Kshs.283, 834.00
is hereby awarded as special damages. As indicated, this special damages is conditional on
payment of requisite stamp duty as assessed by and paid to the collector of stamp duties."

S.20 - Stamping out of Time: The Act gives the Commissioner for Domestic Taxes power to allow
stamping of a document where he is satisfied that the omission or neglect to stamp did not arise
from any intention to evade payment of Stamp Duty or to defraud, and that the circumstances of
the case justify leave being given to stamp out of time.

Where such leave is given, the instrument is stamped on payment of the unpaid Stamp Duty and
of a penalty unless the Commissioner waives the penalty on being satisfied that the circumstances
warrant such waiver.

S.24 - Refund of Stamp Duty

The Act gives the Commissioner power to refund Stamp Duty if he is satisfied that an instrument
has been erroneously assessed with duty or penalty.

The application for a refund must be made within 1 year after the date of payment of that duty.
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S.26 – Provides that evasion of duty constitutes an offence for which a fine is payable.
S.117 GLA and S.111 RLA - No document required by law to be stamped shall be accepted for
registration unless it is duly stamped.

By virtue of Act No.4 of 1999, no stamp duty is chargeable on a transfer of real property from one
spouse to another.

Calculation of Stamp Duty

This will depend on the transaction in question, that is, whether it is a transfer, lease, charge, etc.
The assessment of Stamp Duty is based on a percentage of the Consideration stated in the
instrument, that is, the value of the subject matter.

S.10 – requires that all facts and circumstances affecting Stamp Duty must be set out in the
instrument. Consideration is one such fact and must be stated in the instrument. Failure to do so
constitutes an offence punishable by a fine.

False Declaration of Consideration

A person who attempts to cheat or defraud the Government by failing to declare the true
Consideration in the instrument is guilty of a criminal offence and is liable to prosecution. E.g. a
person may quote the Consideration on a transfer as KShs.300,000/= instead of the true value of
KShs. 800,000/= in order to pay less Stamp Duty.

The Commissioner is empowered to accept the Consideration stated in the instrument for purposes
of assessing Stamp Duty. However, if the Commissioner is of the opinion that the Consideration
stated does not represent the true value of the transaction in question, he will instruct the Valuation
Section of the Department of Lands to value the property for purposes of assessment of Stamp
Duty.
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It is mandatory for a property on sale to be physically inspected and valued by a Government

Valuation Officer. This is to ensure that a Purchaser pays stamp duty on the basis of the true market
value of the property, if it is higher than the purchase price quoted by the parties. The valuation
assessed by the Government Valuation Officer is subject to approval by the Chief Land Valuer.

The requirement for Government valuation is a pre-requisite for registration of the transfer. In
order for the valuation to be carried out, the Vendor is required to complete a form referred to as
a Valuation Requisition for Stamp Duty. The details to be provided on the form include the names
and addresses of the Vendor and Purchaser, the Land Reference Number or Title and Block
Number, whether the interest passing is freehold or leasehold, whether the whole interest or only
part of the interest is passing, the value submitted by the parties (purchase price) and the date of
Transfer

Following an amendment vide Legal Notice No. 97 of 1991, the registrar is empowered to lodge
a caveat on property purchased in a bid to secure the payment of stamp duty, which upon valuation
may be found to be due and owing to the government. Naturally, this burden is imposed upon the
purchaser, because the caveat is lodged once the property has passed.

ASSESSMENT OF AMOUNT OF DUTY PAYABLE ON

SPECIFIC INSTRUMENTS

1. Transfer of Immovable Property: Two categories of Land:

a) Land within a Municipality - 4% of purchase price

b) Land outside a Municipality
(Includes Agricultural Land) - 2% of purchase price

2. Mortgages and Charges (including Second and Subsequent Mortgages):

Stamp Duty is based on the amount secured. The rate is 2/= per 1,000/= i.e. 0.2% or 0.002.
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Further Mortgage or Charge: 1/= per 1,000/= i.e. 0.1% or 0.001.

Equitable Mortgage or Charge: 1/= per 1,000/= i.e. 0.1% or 0.001.

3. Discharge of Charge or Re-Conveyance of Mortgage: Stamp Duty is also based on the

amount secured. The rate is 50Cts per 1,000/= i.e. 0.05% or 0.0005.

4. Leases: Stamp Duty is based on the Annual Rent payable. There are 2 categories of leases:

a) Period exceeding 1 year but less than 3 years: 10/= per 1,000/= i.e. 1% or
0.01
b) Period exceeding 3 years: 20/= per 1,000/= i.e. 2% or 0.02.

5. Gift inter-vivos (voluntary transfer): This is a gift given during the life of the
donor. Although the gift is expressed to be given “in consideration of love and affection”,
it is treated as a transfer for value and stamp duty is based on the value of the property.
The rate is therefore the same as that for a transfer.

6. Transmissions (Testate and Intestate): These attract a nominal amount of stamp duty
where the property is transferred to a beneficiary (e.g. from trustee to beneficiary). Note
however: That where the beneficiary sells to a third party, then the full amount of stamp
duty is payable.

7. Agreement for Sale: Nominal Amount – 500/=

8. Surrender of Lease: – Nominal Amount

REGISTRATION FEES
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BEFORE MAY 2012

S.117 GLA - states that no document shall be registered unless the prescribed fees have been paid
and refers to S.128 of the same Act to the same effect.

S. 156 (1) RLA - states that the prescribed fees shall be payable in respect of Land Certificates,
Certificates of Leases, searches, printed forms and all other matters connected with registration. It
states further that the Registrar may refuse registration until the fees are paid.

S.156 (2) - states that the Registrar may accept a document for registration without payment of
registration fees provided that any unpaid fees shall be recorded in the Register.

S.157 - The unpaid fees constitutes a debt due to the Registrar and the said debt shall be a civil
debt which is recoverable by summary judgement.

See: Land Registration Act S.102

S.102(1) – The Cabinet Secretary may prescribe the fees to be paid.

S.102(2) – The fees prescribed shall be a per centum rate of the value of the land.

S.102(3) – The Registrar shall refuse to register a document in respect of which a fee has not been
paid unless the fee has been waived.

S.102(4) – Unpaid fees or expenses incurred by the Government in connection with any attempt
to recover those unpaid fees shall constitute a civil debt recoverable summarily.

CONSENTS

Some transactions in land require certain consents before the documents relating thereto
can be registered. S. 39 (2) of the LRA prohibits the Registrar from registering any
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transactions in land unless all consents required to be obtained in respect of the

transaction has been given by the national or county government on the use of the land,
or that no consent is required. The following consents are pertinent:

1. CONSENT OF THE LAND CONTROL BOARD

This is governed by the Land Control Act (Cap 302). The purpose of this Act is to control
transactions in agricultural land. The transactions in question are referred to as
controlled transactions.

S.2 of the Land Control Act defines “Agricultural land.” It means:

a) Land that is not within -

i) a municipality or township
ii) an area which was a township under the Township Ordinance (now
repealed)
iii) an area which was a trading centre under the Trading Centres Ordinance
(now repealed)
iv) a market

b) Land in the Nairobi area or in any municipality, township or urban centre that is
declared by the Minister by notice in the Gazette, to be agricultural land for
purposes of this Act.

By virtue of the Proviso to S.2, the definition of agricultural land excludes land which, by
reason of any condition or covenant in the title thereto or any limitation imposed by law,
is subject to the restriction that it may not be used for agriculture or to the requirement
that it shall be used for a non-agricultural purpose.

Section 3 states that the Minister may, by notice in the Gazette, apply this Act to any area
if he considers it expedient to do so.
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Section 4 provides that the Minister may, by notice in the Gazette, divide a land control
area into two or more divisions, if he considers it expedient to do so. Section 5(1) states
that the Minister shall, by notice in the Gazette, establish a land control board for every
land control area or division. Land Control Boards have therefore been set up under the
Act for the purpose of controlling transactions in agricultural land. The Boards operate at
three successive levels. These are:

a) The Land Control Board - established under Section 5(1)

b) The Provincial Land Control Appeals Board - established under Section 10(1)
c) The Central Land Control Appeals Board - established under Section 12(1).

Section 5(2) provides that the membership of the Land Control Board shall be as provided
in paragraph 1 of the Schedule to the Act. Section 10(2) states that the membership of the
Provincial Land Control Appeals Board shall be as provided in paragraph 2 of the
Schedule. Section 12(2) states that the membership of the Central Land Control Appeals
Board shall be as provided in paragraph 3 of the Schedule .

Note: The structure of the Land Control Boards will change to conform to the National
and County Governments structures. So far, County Land Management Boards have been
set up under Section 18 of the National Land Commission Act 2012. This section was
however repealed by s. 39 of the Land Laws (Amendment) Act (2016).

S.6 (1) lists transactions which require LCB consent. Failure to obtain LCB consent
renders that transaction null and void. The transactions listed are as follows:

a) Sale, transfer, lease, mortgage, exchange, partition or other disposal of or dealing

in any agricultural land situated within a land control area;

b) Division of agricultural land into two or more parcels to be held under separate
titles;
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c) Issue, sale, transfer, mortgage or any other disposal of or dealing with any share in
a private company or co-operative society which owns agricultural land.

Under S.6 (2), the declaration of a trust of agricultural land situated within a land control
area also requires LCB consent.

Under S.6 (3), LCB consent is not required in respect of the following transactions:

a) Transmissions of agricultural land (whether by testate or instate succession)

unless that transmission would result in the division of the land into two or more
parcels to be held under separate titles;

b) Transactions to which the Government is a party or transactions which involve

trust land. (Under the Constitution of Kenya 2010, trust land is classified as
community land.)

S.8 (1) states the procedure for obtaining LCB consent. Applications are to be made to
the LCB through the appropriate lands office, using prescribed forms (See Form 1 of the
Schedule). Form 2 of the Schedule contains the format of the Letter of Consent. The
application must be made within six months of the making of the agreement for the
controlled transaction. The Proviso to Section 8(1), however, states that the High Court
may grant an extension of that period if there is sufficient reason to do so and upon such
conditions as it may think fit. (The application is usually made by way of Originating
Summons.)

If an applicant is dissatisfied with the decision of the LCB refusing consent, an appeal lies
to the Provincial Land Control Appeals Board from which a higher appeal lies to the
Central Land Control Appeals Board. See Sections 11 and 12. Under S. 13(2), the decision
of the Central Land Control Appeals Board shall be final and shall not be questioned in
any court. But note: Judicial Review applies.
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S.9 (1) (b) - Generally, the Land Control Board consent ought to be refused in the
following situations:

(i) Where the person to whom the land is to be disposed of-

(a) Is unlikely to farm the land well or to develop it adequately; or

(b) Is unlikely to be able to use the land profitably for the intended purpose owing to
its nature; or

(c) Already has sufficient agricultural land.

(ii) Where the person to whom the share to be disposed of-

(a)Already has sufficient shares in a private company or co-operative society that

owns agricultural land; or

(b)Would, by acquiring the share, be likely to bring about the transfer of the control
of the company or society from one person to another and the transfer would be
likely to lower the standards of good husbandry on the land; or

(iii) Where the terms and conditions of the transaction (including the price to be paid) are
markedly unfair or disadvantageous to one of the parties to the transaction; or

(iv) Where, in the case of the division of the land into two or more parcels, the division
would be likely to reduce the productivity of the land.

From the above, the following objectives of the Land Control Act can be identified:

(a) To ensure that agricultural land is acquired by persons who can farm the
land properly. (Therefore the farming experience of the purchaser is important. However,
this is so in theory only.)
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(b) To ensure that agricultural land is equitably distributed among persons

who can farm it. (Therefore it is necessary to know how much agricultural land a person
already has. Again, this is true in theory only.)

(c) To ensure that land is not acquired for speculative purposes. (This is also true in
theory only.)

Under Section 9 (1) (c), where the person intending to acquire the land is a non-citizen,
consent shall not be given. However, under S.24, the President has power to exempt any
transaction or person from the provisions of the Land Control Act. Such exemption is
granted by way of notice in the Gazette. Note: Article 65 (1) of the Constitution 2010
states that a person who is not a citizen may hold land on the basis of leasehold tenure
only and the lease when granted shall not exceed 99 years. See also Section 107(3) of the
Land Registration Act which states that for the avoidance of doubt, any lease granted to a
non-citizen shall not exceed 99 years.

Under Section 9(2), where an application for the consent of a Land Control Board has
been refused, then the agreement for a land controlled transaction shall become void-

(a) on the expiry of the time limit for an appeal to the Provincial Land Control Appeals
Board; or

(b) where an appeal is made to the Provincial Land Control Appeals Board and
dismissed, on the expiry of the time limit for an appeal to the Central Land Control
Appeals Board; or

(c) where a further appeal is made to the Central Land Control Appeals Board and
dismissed.

However, where it can be proven that the vendor is trying to unjustly enrich himself and
escape from the bargain made to the buyer, the Courts have not shied away from applying
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the concept of constructive trusts to such cases in order to compel the vendor to fulfil her
bargain- Macharia Mwangi Maina & 87 Others v Davidson Mwangi Kagiri
[2014] eKLR.

Also see the case of Kiplagat Kotut v Rose Jebor Kipngok [2019] eKLR:

Facts: The Appellant agreed to buy the land of the Respondent upon paying a charge held
by the Agricultural Finance Corporation (AFC). The agreement was dated on 31st January
2000. Consent of the Land Control Board was sought on December 28, 2000. After the
Appellant had finished his part of the bargain, the Respondent refused to transfer the land
to the Appellant. She argued, inter alia, that the consent of the land control board was
not obtained within six months of the agreement as per s. 8 (1) of the LCA. The High
Court upheld this agreement, stating that the failure of the Appellant to file for extension
of time under s. 8, LCA rendered the agreement null and void.

On appeal, the CoA held:

There are three elements to a constructive trust:
i. The enrichment of the defendant;
ii. The corresponding deprivation of the plaintiff;
iii. The absence of a juristic reason for the enrichment.

“We hasten to state that the Land Control Act, Cap 302 of the Laws of Kenya was
never intended to be an instrument or statute for unjust enrichment. It was never
mean to exempt a mala fide vendor from his contractual obligations. The statute
comes to the aid of persons who act in good faith without taking undue advantage
of the other party. It is not a statute aimed at aiding unconscionable conduct
between the parties. It is in this context that the doctrine of constructive trust
comes into play to restore property to the rightful owner and to prevent unjust
enrichment. It prevents unconscionable conduct and ensures one party does not
benefit at the expense of another.”
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The CoA ordered the vendor to transfer the property to the Respondent and in default,
for the Registrar of Lands to effect the transfer without further reference to the
Respondent.

2. CONSENT OF COMMISSIONER OF LANDS/ NATIONAL LAND

COMMISSION

All leases that are granted by the Government are subject to such conditions as to
development and user. For this reason, there is a prohibition against transferring, letting,
sub-letting or charging the leased property without the written consent of the
Commissioner of Lands/National Land Commission on behalf of the Government. Such
prohibitions are usually found in the Special Conditions contained in the title documents.

3. CONSENT OF KENYA RAILWAYS CORPORATION

Where the property in question is adjacent to a railway line i.e. within the jurisdiction of
Kenya Railways Corporation, the consent of the Corporation must be sought. This applies
to leases granted by the Government as well as agricultural land. The consent of the
Corporation will be required in addition to that of the Commissioner of Lands or the
LCB as the case may be.

4. CONSENT OF KENYA PORTS AUTHORITY

This consent is required for any dealing in land bordering any ports or harbours in Kenya
which fall under the jurisdiction of Kenya Ports Authority.

5. CONSENT OF KENYA AIRPORTS AUTHORITY

This consent is required for any dealing in land bordering any airports or airstrips in
Kenya which fall under the jurisdiction of Kenya Airports Authority.

Section 15(3) of KAA Act provided as follows:-

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“Where any person erects any building which in any way interferes with the
operation of any service provided by the Authority under this Act, the
Authority may, unless the person has previously obtained the
approval of the Managing Director to the erection of such
building or has notified it to the satisfaction of the Managing
Director, apply to the High Court for an order for the demolition or
modification of such building, as the case may require...”

Patrick Thoithi Kanyuira v Kenya Airports Authority [2017] eKLR :

A landowner sought to construct 24 residential mansionettes on land adjacent to the
Wilson Airport. He sought authorization from the KAA. The KAA refused, citing that the
property was in the approach funnel of the main runway, and the buildings would
therefore obstruct the safe landing of aircraft. The land owner objected to this decision,
and filed suit in the High Court, arguing that the actions of KAA amounted to a denial of
his right to property under Art. 40 of the Constitution. He also argued that the denial of
the use of land amounted to a compulsory acquisition of the land, which he argued was
illegal as he had not been compensated.

The Court of Appeal stated the following in dispensing with his appeal, upholding the
judgment of the High Court dismissing his suit:
“ A cursory look at section 15(3) of the KAA Act, shows that it is necessary for one
before constructing any structures near the respondent’s facilities to seek the
approval of the Managing Director, failing which the respondent can go to court
and seek demolition orders, if the erected structures are found to interfere with
the safety, and security of the respondent’s facilities. Section 15 KAA Act may not
expressly say so but the interpretation is simple, unambiguous and on point. This
provision clearly shows that before a person erects a building or any structure
which is likely to interfere with the operations of the respondent, then approval
of the respondent, must be sought.
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“… the public interest rights of the larger number of people who are likely to use
Wilson Airport trumped the individual right of the appellant to own and enjoy
his property under Article 40 of the Constitution.”

Kenya Civil Aviation Authority & another v Timothy Nduvi Mutungi [2017]
eKLR:
KAA, and KCAA, by extension, is within its discretion to refuse to grant consent to build,
and does not have to compromise and tell the landowner the maximum height of a
structure that can be built, especially where the land is on the approach funnel of a
runway.

6. CONSENT OF CHARGEE

The chargor must obtain the consent of the chargee before he can transfer or lease the
charged property which is the security of the chargee. This provision is usually contained
in the charge/mortgage instrument. See also S.59 of the Land Registration Act 2012.

7. CONSENT OF LANDLORD AND HEAD LESSOR

A tenant must always obtain the consent of the landlord if he wishes to assign his interest
or sub-let the property. See Sections 54(1) and 55 of the Land Registration Act 2012.

8. SPOUSAL CONSENT

Section 93 of the LRA 2012 cross refers to the Matrimonial Property Act (MPA), which,
in s. 12 requires the consent of a spouse where the other spouse seeks to charge or transfer
land or a dwelling house which that other spouse holds in his or her name individually.
The consent is usually given in the form of an Affidavit.

Matrimonial Property Act , s. 6 (1) defines matrimonial property as:

(a) the matrimonial home or homes;
(b) household goods and effects in the matrimonial home or homes; or
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(c) any other immovable and movable property jointly owned and acquired
during the subsistence of the marriage.

s. 12 of the MPA:

(1) An estate or interest in any matrimonial property shall not, during the
subsistence of a monogamous marriage and without the consent of both spouses,
be alienated in any form, whether by way of sale, gift, lease, mortgage or otherwise.
(2)…
(3) …
(4) …
(5) …

Section 93 of the Land Registration Act No. 3 of 2012 provides:-

Subject to any written law to the contrary, if a spouse obtains an interest in land
during the subsistence of a marriage for the co-ownership and use of both spouses
or all spouses, such property shall be deemed to be matrimonial property and shall
be dealt with under the Matrimonial Property Act.

In Mugo Muiru Investments Limited v E W B & 2 Others (2017) eKLR, the Court
of Appeal held as follow:
“As stated above, even though the matrimonial property was registered in the
name of S B alone, he held the title and legal estate in trust for both himself and
Elizabeth jointly. …Lord Diplock in Gissing v. Gissing (1970) 2 All E.R. 780.
(1971)AC 886. at pg 906 in (1971) AC 886 held that;-
“in nearly all these cases, the inexorable inference is that the husband is to hold
the legal estate in the house in trust for them both, for both to live in for the
foreseeable future. The couple does not have in mind a sale, nor division of
proceeds of sale, except in the far distance.””
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Kadzo Mkutano v Mukutano Mwamboje Kadosho & 2 others [2016] eKLR;

“Section 28 of the Land Registration Act recognizes spousal rights over
matrimonial property as an overriding interest. Spousal consent, is therefore
required before a spouse can sell matrimonial property. In the absence of such
a consent, the sale becomes null and void.”

CLEARANCE CERTIFICATES

1. RATES CLEARANCE CERTIFICATE

This is issued by the appropriate County Government authority in whose area the land is
situated. It certifies that all monies payable to the County Government in respect of that
property have been paid. Such monies include:
i) land rates
ii) interest charges on rates and
iii) unpaid water bills.

It is necessary to obtain a Rates Clearance Certificate before a transfer is presented for

registration: Section 38(1) of the Land Registration Act 2012 states that the Registrar shall
not register a transfer unless a written statement by the relevant government agency
certifying that all outstanding rates and other charges in respect of the land is produced
to him. The document is referred to as a Rates Clearance Certificate.

2. LAND RENT CLEARANCE CERTIFICATE

All leaseholds from the Government are subject to the payment of an annual rent by the
grantee of the lease. This requirement is found in the Special Conditions contained in
the title document. Section 39(1) of the Land Registration Act 2012 provides that the
Registrar shall not register an instrument purporting to transfer or create an interest in
land unless a certificate is produced certifying that no rent is owing to the national or
county governments in respect of the land. Therefore before registering any transaction
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involving leasehold land, the grantee must obtain a Rent Clearance Certificate. See also
Ss.55 and 56(4) of the Land Registration Act 2012.

INVESTIGATION OF TITLE
Without a good title there will be no conveyance. Why do we investigate title?
1. Prudence demands that you investigate anything that you want to acquire. By
investigating title, it gives you an insight of the property you intend to buy or take
as security

2. All land principles have the principle of a bona fide purchaser for value without
notice who acquires a good title. Proving that you have bona fides- good faith,
requires that you investigate title as it will inform you whether there are any
encumbrances or defects in the title.

3. The caveat emptor principle demands that the buyer is responsible for checking
the quality as well as the suitability of the property he intends to acquire.

4. Investigation of title is not only confined to the registry or title deed alone but also
extends to the physical structure of the property e.g. whether the land is fit for
purpose and corresponds to the verbal descriptions given by the seller.

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

Richard Odual Opole vs Commissioner of Lands & 2 Others (2015) eKLR (CoA):
where there is a tainted and irregular procedure leading to the registration of the title,
one cannot be a bonafide purchaser for value without notice.

Samuel Kamere v Land Registrar (2015) eKLR (CoA):

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“ in order to be considered a bonafide purchaser for value, a person must prove

that he had acquired a valid and legal title, secondly that he carried out the
necessary due diligence to determine the lawful owner from whom he
acquired legitimate title and thirdly that he paid valuable consideration for
the purchase of the suit property.”

M W K v S K K & 5 others [2018] eKLR:

In this case, a purchaser bought land from a man who the Purchaser knew was married
without obtaining spousal consent. The purchase was registered and title transferred. He
then transferred the property to a third party, who used the property to secure a loan from
a SACCO, and a charge was registered (the 3rd party sought the consent of his wife to
register the charge). The transactions were quick- successive transfers and registration
resting with the charge of the suit property in a span of 37 days. Held:
“the 2nd Defendant did not have a valid and legal title that he could transfer to
the 3rd Defendant. Secondly due diligence by the 3rd Defendant ought to not only
have been evidenced by a search but also an enquiry from the 2nd Defendant as
to how the title to the suit land was obtained... The Court does not find any
bonafides in respect of the 3rd Defendant’s conduct relating to due diligence at
the time of purchasing the suit land from the 2nd Defendant. Having received no
good title could the 3rd Defendant pass a good title by way of a charge to the 4th
Defendant? The answer is in the negative.”

When do you investigate title or property

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

Mediums of investigation of title/property

1. Search on the title itself
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2. Pre-contract enquiries/ preliminary enquiries

3. Inspection of the title coupled with requisitions

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

There are currently 61 registries in Kenya.

There are two types of searches:

a) Official Search

This is where the registrar does the inspection of the register or search upon one’s written
request in the prescribed form. The registrar subsequently issues a certificate of official
search. S. 34 of the Land Registration Act provides for an application for a search, effected
by application in form LRA 84, and a Certificate of Official Search is issued in Form LRA
85.

NOTE: The Lands Registry always has two files relating to a parcel of land i.e. deed file
and correspondence file

b) The Historical Search

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

See: Gitwany Investment Ltd v Taj Mal Ltd & 2 Ors HCCC 114 of 2004 [2006]
eKLR
Lenaola J. relied greatly on the correspondence file in making a finding on who was the
rightful owner of the land. The case involved double allocation of land. The learned Judge
relied on the historical search to establish the first allocation of the land to the Plaintiff
and therefore invalidated the Defendant’s title that had been allocated second.

National Land Commission v Afrison Export Import Limited & 10 others

[2019] eKLR
A search on a piece of land, conducted in January 2018 showed that there were no
encumberances on the land. A second search on the same piece of land, conducted in
August 2018 showed that there were two undischarged mortgages on the same piece of
land.
"Based on the inherent danger of the search system which is based on the Torrens
System of registration, it is necessary for one to take further steps to ascertain
the authenticity of the search and ownership of the land. If the Applicant had
bothered to delve into the history of the title, it would have discovered that the
title had two mortgages besides other entries in the register and the other
transactions in respect of L.R. No. 7879/4 which were not noted on the register…

“We do not think the Applicant’s contention that it solely relied on the search when
undertaking the compulsory acquisition of the land on which the two schools sit
was diligent and pragmatic…

“Section 28 of the Land Registration Act lists overriding interests that subsist and
affect land but which need not be noted on the register. One of these interests is
rights acquired or in the process of being acquired by virtue of any written law
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relating to the limitation of actions or by prescription. In undertaking due

diligence, one must go further and ascertain if there are any overriding interests
affecting the land they wish to transact on. In light of the foregoing, our finding
is that a search is not conclusive evidence of ownership. One needs to go further
than a mere search.”

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

Other Searches
1. Companies registry

2. Survey Departments

3. Local Authority – discloses zoning/development policies of land. Urban planners

and surveyors can carry out these searches. This is especially important when you
know what use is to be made of the land

A search at the Companies’ registry will reveal whether the company still exists, whether
there are insolvency proceedings etc

A search at the Survey Department involves a consideration of the boundaries.

A local authority search will reveal any adverse proposals e.g. advice to the Government
of compulsorily acquiring land for public purposes

CHALLENGES IN SEARCHES
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1) Unavailability of deed files or “missing titles”

2) Mutilation and destruction of files and documents in the files

3) Delays with regard to search results. You need about seven

clear working days before you get them, especially in registries
that are not digitized.

4) Unavailability of Land Registers to sign your searches i.e. lack

of efficiency and skilled manpower at the Land Registries

5) Slow pace of digitization of land records.

Significance of Searches
1) Failure to carry out a search may lead to the failure to register a
document e.g. because of the existence of encumbrances

2) The vendor may turn out not to be the owner of the property. This
can be discovered by a search

3) The title document may be a forgery

4) The above errors occasioned because of omitting to carry out search

may lead to negligence suits against you.

LETTERS OF ALLOTMENT

This come from the Government through either the Commissioner of Lands or the Local
Council if it is Council Property. Letters of allotment were issued under S.3 (a),
Government Lands Act (GLA) which provides for alienation of unalienated land. The
issuance of letters of allotment was accompanied by the physical Development Plan of the
area.

A letter of allotment is only valid where none has been issued before- a 2nd letter of
allotment is invalid and irregularly issued, and cannot give valid title.
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Benja Properties Limited v Syedna Mohammed Burhannudin Sahed & 4

others [2015] eKLR: an allotment of an interest in land is a transaction in rem attaching
to and running with a specific parcel of land.

As such, where a letter of allotment has been validly issued before and is still in force, or
where a valid title is issued upon the land, no letter of allotment can be issued on the
property.

Philemon L. Wambia v Gaitano Lusitsa Mukofu & 2 others [2019] eKLR

In this case, there were competing claims to a piece of land. The Appellant claimed that
he had been allotted the land in 1984- the allotment letter he produced in court however
was dated 1986. The Respondent had bought the land from a Mr. Muthurania who had
an allotment letter dated 1984. The Respondent had a valid certificate of title in his name,
issued on the purchase of the land from Mr. Muthurania in 1985. In deciding who held
proper title to the land, the CoA stated the following:

“36. On our part, we have considered the evidence on record on the two letters of
allotment. The evidence on record shows that the first allotment to the suit
property was to Mr. Joseph Muturi Muthurania. In Benja Properties Limited -v-
Syedna Mohammed Burhannudin Sahed & 4 others [2015] eKLR, this Court
stated that an allotment of an interest in land is a transaction in rem attaching
to and running with a specific parcel of land.
37. In the instant case, the second letter of allotment to the appellant
did not attach in rem to any land since there was no parcel upon
which the allotment could attach. The first allotment to Mr. Joseph Muturi
Muturania effectively made the suit property unavailable for allotment to the
appellant the more when the first allottee had fulfilled the terms and conditions
of the allotment.”

It is risky to deal with a letter of allotment e.g.

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1. Most have stringent conditions which if not complied with within the stipulated
time automatically revokes the letter of allotment

2. One may carry out a historical search on land being allotted on the general file i.e.
zone file and correspondence file etc. in carrying out a search on the basis of a letter
of allotment look out for planning conducted e.g. by the Local authority. Look for
the Part Development File (PDF) which should be properly prepared and signed
by the Chief Physical Planner and Commissioners of Land

NOTE: The CA has held that unless a letter of allotment is registered it is not recognized
in law- Wreck Motor Enterprises v Commissioner of Lands and 3 Others
[1997] eKLR. In Stephen Mburu & 4 Others v COMAT MERCHANT LTD &
Anor. [2012] eKLR, the High Court (Kimondo J.) held that “a letter of allotment is not
a title to property. It is a transient and often conditional right or offer to take the
property.” It can therefore be superseded by a duly acquired title, even if acquired after
the letter of allotment.
 TRANSFERS (SALE OF LAND)

Sections 2 and 36 – 53 of the Land Registration Act No.3 of 2012

Sections 2 and 43 – 54 of the Land Act No.6 of 2012

Definition

Section 2 of the Land Registration Act No.3 of 2012 and Section 2 of the Land Act No.6 of
2012 both define a transfer as "the passing of land, a lease or a charge from one party to
another by an act of the parties and not by operation of law and includes the instrument by
which the passing is effected."

The transfer can be by way of a sale or a gift of an interest in land. When it is conveyed by
way of gift, it is stated to be made in "consideration of love and affection".

There are two stages in a sale of land:

• Contractual stage
• Transfer or Conveyance stage, also referred to as the Completion stage.

Agreement for Sale

The rights and liabilities of the vendor and purchaser are usually set out in the Agreement
for Sale.
The vendor and purchaser in a Contract of Sale, that is, Agreement for Sale, may
incorporate the Law Society Conditions of Sale in so far as they are not inconsistent with
the conditions contained in the Agreement for Sale. The Agreement must state the year of
the applicable Law Society Conditions of Sale (1974, 1982 or 1989). Advocates now apply
the 1989 Conditions as a matter of practice.

One Advocate acting for both Vendor and purchaser

Where one advocate acts for both parties, that advocate will be entrusted with the duty of
drafting both the Agreement for Sale and the Transfer.

However, where each party has his own Advocate, the usual practice is that the Agreement
for Sale is drafted by the Advocate for the Vendor and the Transfer by the Advocate for the
Purchaser. This is provided for by the Advocates Remuneration Order.

The Advocates for the parties need to obtain certain particulars/information from their
respective clients. Generally, these are as follows:

2
 Particulars Required (Generally)

The following particulars are required by the Advocates for determination of the provisions
to include in the Agreement for Sale:

1. Full names and addresses of the parties and their advocates, if any.

2. Details of the property and the whereabouts of the documents of title.

3. Nature of the interest to be sold - whether freehold or leasehold.

4. Agents, if any.

5. Purchase price.

6. Whether any deposit has been paid and, if so, how much, to whom and in what capacity
- usually paid to the agent of the vendor or vendor's advocate as stakeholder.

7. Date of possession if different from date of completion.

8. Whether the property is to be sold with vacant possession.

9. Completion date - i.e. when the last essentials are carried out and the balance of the
purchase price is paid.

10. Whether the Land Control Act (Cap 302) applies.

11. Whether any moveables in the property are to be sold and, if so, their price.

12. Whether the purchaser is taking over the vendor's insurance or not.
3
13. Whether the purchase price or part thereof is being raised on a mortgage or charge by
the purchaser and, if so, on what terms. Usually the balance of the purchase price is paid
by the chargee upon registration of the charge in its favour.

4
 PROCEDURE

There are duties to be performed by the respective Advocates. These duties also constitute
the procedure by which the sale is effected. The duties are as follows:

DUTIES OF THE VENDOR'S ADVOCATE

1. Draft the Agreement for Sale.

2. Have the Agreement approved by the vendor and purchaser or purchaser's advocate.

3. Engross the approved Agreement.

4. Forward the documents of title to the purchaser's advocate upon the latter's professional
undertaking.

5. Approve the Transfer on behalf of the vendor.

6. Obtain all the relevant consents and clearance certificates and forward these to the
purchaser's advocate.

7. Have the Transfer executed by the vendor and attested (and verified where applicable).

8. Obtain the balance of the purchase price from the purchaser's advocate for onward
transmission to the vendor.

DUTIES OF THE PURCHASER'S ADVOCATE

5
1. To carry out a search over the land at the appropriate registry.

2. To examine the documents of title.

3. To approve the Agreement for Sale.

4. To send out requisitions if necessary and ensure that the purchaser has inspected the
property.

5. To ensure that the vendor has obtained the necessary consent - consent to transfer.

6. To draft the Transfer and have it approved and thereafter engrossed.

7. To prepare and send out a completion statement to the purchaser requesting for funds
for stamp duty, registration fees, legal fees, etc.

8. To send the Transfer to the vendor's advocate for execution by the vendor and
attestation and verification.

9. To have the Transfer executed by the purchaser and attest and verify the purchaser's
signature.

10. To carry out a final search immediately before stamping and lodging the documents for
registration.

11. To have the documents stamped and lodged for registration.

12. Upon registration, to release the title documents to the purchaser and the balance of
the purchase price to the vendor's advocate for onward transmission to the vendor.
6
13. Where the property is being charged, to forward the title and charge documents to the
chargee or its advocate and call for the balance of the purchase price for onward
transmission to the vendor's advocate.

14. To complete accounting and dispose of any other documents as instructed.

Note: Section 45 of the Land Act No.6 of 2012 - In a transfer of a leasehold interest the
following are implied:

a) A warranty on the part of the transferor that the rent reserved has been paid and
the covenants contained in the lease have been performed upto the date of the
transfer; and

b) An agreement on the part of the transferee as from the date of the transfer to pay
the rent and observe the covenants contained in the lease.

7
 TRANSMISSIONS

Sections 2 and 60 – 67 of the Land Registration Act No.3 of 2012

Sections 2 and 49 – 54 of the Land Act No.6 of 2013

A Transmission is the passing of property by operation of law. The following are the
modes of transmission:

1. On the death of a proprietor.

2. Upon insolvency or liquidation of a limited liability company.

3. Pursuant to a court order – This may be a court order for adverse possession
or a court order issued upon execution and attachment of property following
a decree.

4. Following compulsory acquisition.

Transmission on Death of a Proprietor

The process of transmitting property from the name of a deceased into the name of a
beneficiary is conducted by the deceased’s personal representatives. These are of two
types:

Executors – where there is a Will - Testate – Grant of Probate

Administrators – where there is no Will - Intestate – Letters of Administration

8
Transmission on death of a joint tenant

Section 60 of the Land Registration Act No.3 of 2012

Section 49 of the Land Act No.6 of 2012

This is effected by registering the Death Certificate against the title.

Transmission on death of a sole proprietor or tenant in common

Section 61 of the Land Registration Act No.3 of 2012

Section 50 of the Land Act No.6 of 2012

Such registration is effected by an application in the prescribed form attaching the Grant
of Probate or Letters of Administration which will be registered against the title.

A nominal amount of stamp duty is payable on this application.

Agricultural Land

If the property being transmitted is agricultural land, consent of the Land Control Board
is NOT required. Reason: This is one of the exceptions under S.6 (3) of the Land
Control Act (Cap 302). However, where the transmission results in the division of the
land into two or more parcels to be held under separate titles, LCB consent is required.

9
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CHARGES

These are prepared where land is used as security for a loan. Previously called
“mortgages” under old English law and under previous land regimes in Kenya.

Note: According to Section 78 of the Land Act No.6 of 2012, the provisions on
charges contained in Part VII of the Act apply to all charges on land including
any charge made before the coming into effect of the Act.

Section 79 of the Land Act No.6 of 2012 provides for Informal Charges, Formal Charges
and Lien by Deposit of Documents.

Before May 2012

Legal and Equitable Mortgages were found under the LTA and GLA.

Legal and Equitable Charges were found under the RTA.

Legal Charges were found under the RLA only. There were no equitable charges under
the RLA.

Reason: Under the RLA, the Land Certificate or Title Deed for absolute proprietorship
and the Certificate of Lease for a leasehold interest were only prima facie evidence of
title. The conclusiveness of title was the Register. RLA documents of title were not proof
of the indefeasible interest of the registered proprietor, unlike the Certificate of Title or
the Grant under the RTA. As such, the RLA document of title could not be deposited with
a lender to create an equitable charge.

Further, the issuance of a title document under the RLA was not automatic. The
proprietor was required to apply for it to the Registrar and pay the requisite fee. In
addition, the proprietor was required to pay for every subsequent entry in the Register.

Conceptual Distinction between a Mortgage and a Charge

English Mortgage - S.58(e) ITPA - By this mortgage the borrower bound himself to repay
the mortgage money on a certain date and transferred or conveyed the property to the
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lender subject to the borrower’s right of redemption. This was what distinguished a
mortgage from a charge.

Charge - In a charge, the chargor merely provided the land as a security but did not convey
it. S. 80, Land Act 2012: “a charge shall have effect as a security only and shall not operate
as a transfer of any interests or rights in the land.”. Per Onalo, p. 128:

“When one is creating a mortgage he is saying

‘Take my land until I pay you’

whereas when one creates a charge he is saying

‘Give me the money, if I fail to pay you take my land”.

Section 56(5) of the Land Registration Act No.3 of 2012 and Section 80(1) of
the Land Act No.6 of 2012 both provide that a charge shall have effect as a
security only and shall not operate as a transfer.

PROCEDURE FOR PREPARATION AND REGISTRATION OF A CHARGE

The Advocate for the Lender/Chargee drafts the charge. This is because it is the Lender
who gives the money to the borrower on the security of the Borrower’s land.

Before a Lender instructs an Advocate to draft a charge, the Lender will have had
discussions with the Borrower. Usually, the Borrower will have made an application for
a loan. This is normally done using the prescribed form of the financial institution
concerned.

Particulars required by the Lender’s Advocate

1. Full name and address of the Lender - e.g. bank or branch

2. Full name and address of the Borrower and his Advocate, if any

3. Amount of Loan

4. Amount to be secured by the charge (if different from amount of Loan)

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5. Period of repayment of the loan

6. Rate of Interest

7. Mode of payment of the principal amount and interest - i.e. amount of instalment

and whether payable monthly, quarterly etc.

8. Particulars of the property to be used as security and whereabouts of title

documents

Responsibilities/Duties of the Lender’s Advocate

1. Carry out or apply for an official search

2. Obtain documents of title

3. Send out requisitions if necessary

4. Find out if the Lender has inspected the property; if not advise him to so

5. Draft the charge and send it to the Lender for approval if necessary

6. Send the draft charge to the Borrower or his Advocate for approval.

Note: The Borrower has a right to seek independent legal advice from his own
Advocate.

7. After effecting amendments, if any, engross the approved document

8. Ensure that the parties have obtained the relevant consents, where applicable

9. Obtain funds for stamping and registration

10. Forward the document to the Borrower or his Advocate for execution by the

Borrower – See S.56(1) of the Land Registration Act on execution of a Charge as

read together with Sections 44 and 45 of the same Act on execution attestation and
verification.

Verification of execution pursuant to Section 45 of the Land Registration Act

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I CERTIFY that ………………………................................................... and

……………………….................. being the persons witnessing the affixing of the Common Seal
of the Chargor appeared before me on ……………….. and being known to me/being identified by
……. ……………………….. of ………………………......... freely and voluntarily executed this
instrument.
………………………………………………
Name and signature of person certifying

11. Have the document executed by the Lender – Provisions of of Land Registration
Act as above.

12. Stamp the document

13. Lodge it for registration

14. Upon successful registration of the Charge, forward the amount of the loan
proceeds to the Borrower or his Advocate

15. Complete accounting and obtain Advocate’s fees

16. Dispose of any documents in the Advocate’s possession as directed by the Lender.

Barclays Bank v. O’Brien 1994 AC 180- a married couple granted the bank a second
charge over the family home as security for the overdraft facility of a company in which
the husband had an interest. The wife signed the document without reading it; she did so
because of her husband’s misrepresentation to the effect that the liability to the bank was
limited to GBP60,000 and that the exposure under the arrangement would only last for
three weeks. In fact, it was an unlimited guarantee. The bank took no steps to have the
documents explained to the wife nor did it suggest that the wife should take independent
legal advice. When the company failed to meet its obligations, the bank sought an order
for possession of the home. W sought to set the charge aside on the grounds that it was
the result of H’s misrepresentation and undue influence. Only the misrepresentation
defence was relied upon in the House of Lords. Nevertheless, Lord Wilberforce (giving
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the only full judgment) spoke about undue influence and considered the steps that a
lender must take to protect itself from a claim that its agreement with a surety might be
set aside in the event that it is entered into as a result of misrepresentation or undue
influence.

Held: there was a greater risk of undue influence ‘than in the ordinary run of cases where
no sexual or emotional ties affect the free exercise of the individual’s will’ (at p. 191). a
creditor will have satisfied these requirements if it insists that the wife attend a private
meeting (in the absence of the husband) with a representative of the creditor at which she
is told of the extent of her liability as surety, warned of the risk she is running and urged
to take independent legal advice.’ (at . 196)

Credit Lyonnais Bank Nederland NV v Burch 1997 ALL E.R. 144: A junior
employee had been induced by the undue influence of the head of a company's debts by a
charge on her home. She had been advised to get independent legal advice and that the
guarantee was unlimited, but, under pressure from her employer, had refused. The Court
of Appeal was outraged that a lending institution had accepted a guarantee from such a
person in the knowledge that she had no financial interest in the company and that default
would result in the loss of her home and her personal bankruptcy. “No court of equity
could allow such a transaction to stand.”

Royal Bank of Scotland v Etridge 1998 All ER 705: upheld the need for a bank to
explain the nature of the transaction to a spouse who is providing security for her
husband’s business, and to urge her to take independent legal advice.

ANJANABEEN ANIL SHAH V AKIBA BANK [2005] eKLR: Azangalala J. upheld

the principle put down by both Barclays Bank v O’brien and Royal Bank of
Scotland v Etridge that a spouse must be fully explained to the nature of the transaction
being undertaken. Where no such explanation is given and the husband has
misrepresented the nature of the transaction, the charge cannot be upheld and the lender
loses its interest over the property.

Further Charge
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The Advocate for the Lender may also be called upon by the Lender to draft a Further
Charge where the Lender lends additional funds to the same Borrower.

The procedure for drafting the Further Charge is the same as that for a Charge. Although
the Advocate need not investigate the title again since the property will already have been
charged to the Lender who will be holding the title documents, it is advisable and prudent
to investigate title afresh.

Discharge of Charge

Upon full repayment of the charge debt by the Borrower, a Discharge of Charge will be
prepared. This is usually done by the Borrower’s Advocate. The Lender’s Advocate will
therefore have the duty of approving the draft on behalf of the Lender. He will also ensure
that the Discharge is executed by the Lender.

The fee for approving the Discharge is paid by the Borrower.

Advocate acting for both Borrower and Lender and Borrower is Buying

Where the Advocate is acting for both the Borrower and Lender and the Borrower is using
the loan facility to purchase the property to be charged from a third party, the process
involves additional responsibilities.

As soon as the Advocate receives formal instructions to draft the Charge from the Lender,
he will request the Lender to confirm that upon successful registration of the Charge, the
Lender will release the loan proceeds to the Advocate for onward transmission to the
Vendor’s Advocate.

Note: Payment to the Vendor’s Advocate should be conditional upon registration of the
Charge in favour of the Lender.

RESPONSIBILITIES OF BORROWER’S ADVOCATE

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1. Obtain relevant consents

2. Forward the documents of title to the Lender’s Advocate on the latter’s professional
undertaking. This enables the Lender’s Advocate to investigate title and draft the
Charge

3. Approve the draft Charge

4. Have the document executed by the Borrower after advising him as necessary

5. Obtain sufficient funds from the Borrower for stamping and registering the

document

6. The Advocate may be called upon to approve a Further Charge

7. Once the charge debt is repaid, the Advocate prepares the Discharge of Charge

8. He forwards the Discharge to the Lender’s Advocate for approval

9. Once approved, he engrosses the document and sends it back to the Lender’s

Advocate for execution by the Lender

10. He takes the document for stamping and registration

11. He obtains his legal fees and disposes of the documents as required

CHARGEE’S RIGHT TO TACK & CONSOLIDATE

Where a property has been used to secure a first loan from a bank (hence the registration
of a charge on the property), if the property’s value is not exhausted, or if the bank
otherwise agrees, it can issue further amounts secured by the same property. Other banks
can also secure loans using the same property as security, with the consent of the existing
chargee. Normally, charges have priority in the order they are registered- in the event of
a statutory sale, the first charge is paid off, then if there is any money left over, the second
charge is paid off to the extent that the remaining money can satisfy the amount due, and
if there is still money left over, and there is yet another charge, the third charge is paid
off. A second charge by the same lender is referred to as a further charge, while a
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charge, on the same property, but from a different lender, is referred to as a second
charge.

Where a bank is issuing a second charge, it may seek to have its further charge move up
the ladder of priority. If it seeks to do so, there are two methods to do this.

The first is tacking. Here, the bank moves its further charge up in priority while it
maintains its distinct character as a separate amount being advanced to the borrower. As
such, at the time of statutory sale, the first charge is paid out first, and then the further
charge is satisfied if there is any money left off.

The second method is consolidation. Here, the further charge is added onto the amount
of the first charge, and they are treated as one amount. Thus, at the time of the statutory
sale, the proceeds of the sale are applied against the aggregate unsettled amount for the
first and the further charge, before the movement to other charges (if they exist).

The Land Act and courts have interpreted restrictions to the lender’s use of these
methods:

i. They have to be provided for in the charge document;

ii. They right to tack has to be noted in the register against all charges on the land.
iii. For consolidation, a memorandum has to be signed. This memorandum
recognises two possible scenarios: first, the increase in the amount secured by
the property- in this case, the memorandum must be signed by the borrower
(charger); second, the reduction in the amount secured by the property- in this
case, the memorandum must be signed by the lender (chargee). (s. 84 (2), Land
Act).

Section 82 of the Land Act No. 6 of 2012

82. (1) Subject to the provisions of this Act, a chargor may make provision in the
charge instrument to give further advances or credit to the chargor on a current or
continuing account.

(2) A further advance referred to in subsection (1) shall not rank in priority to any
subsequent charge unless—
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(a) the provision for further advances is noted in the register inwhich the
charge is registered; or

(b) the subsequent chargor has consented in writing to the priority of the
further advance.

(3) Except as provided for in this section there is no right to tack.

(4) Where a charge provides for the payment for a principal sum by way of
installments, the payment of those installments shall not be taken to be a further
advance.

This must be provided for expressly in the charge instrument and must also be recorded
in the Register.

Kisimani Holdings Limited & another v Fidelity Bank Limited Civil Case 744
of 2012 [2013] eKLR:

The borrower secured a term loan of KES 22 m from the Bank on some property. The loan
document contained a term that the maximum amount secured was KES 22m. However,
the Bank advanced some more sums to the lender in the form of overdrafts on two of the
company’s accounts. The Bank sought to sell the land through a statutory sale to recover
the entire amount advanced to the borrower, and the borrower sought the court’s
protection. Held (Havelock J.): “… that section 82 of the Land Act, 2012 specifically
provides that there is no right to tack further advances or credit in relation to a charge
instrument, otherwise in accordance with that section. Again I find that the Defendant
Bank has not complied with the provisions of that section.”

Right to Consolidate (s. 83 of the Land Act) - This must be provided for expressly
in the charge instrument and must also be recorded in the Register.

83. (1) Unless there is an express provision to the contrary clearly set out in the
charge instrument, a chargor who has more than one charge with a single chargee
on several securities may discharge any of the charges without having to redeem all
charges.
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(2) A chargee who has made provision in accordance with subsection (1)
for the consolidation of charges shall record that right in the register or
registers against all the charges so consolidated that are registered.

(3) Upon commencement of this Act, the rules of equity applicable to consolidation
shall not apply to charges.

Kakamega District Co-Operative Ltd v Co-Operative Bank Of (K) Ltd &

Another, Civil Case 97 of 2004 [2013] eKLR

A bank advanced a loan to the Coop against a property. After this amount was paid up, it
advanced further sums to the coop for disbursement to its members. This further amounts
were defaulted, and the Bank proceeded to seize the property and auction it. The Coop
filed suit to nullify the sale, stating that the further amounts disbursed were not properly
tacked as the original charge document did not have a tacking provision. Held:

“It is clear from the above two sections that a charge document can provide for the
advancing of further credit to a chargor but such provision has to be specifically
indicated in the charge document. Further under the provisions of section 84 a chargee
has not right to consolidate his charge with any other charges unless that right is
expressly reserved in the charge document. The contentions that the charge document
was a continuing one and could be utilized as a security for other advances does not
arise. The charge document does not provide for the consolidation for other charges or
for using it as a security for other advances.”

Stephen K. Melly & 2 Others v Ecobank Kenya Limited & Another, Civil Suit
355 of 2015 [2016] eKLR

“…once the parties agree to increase or reduce the amount secured by the charge, then
it becomes mandatory for a memorandum to be prepared giving effect to that
agreement, and that is why the section provides that the memorandum 'shall' comply
with subsection (5), be signed, and state that the principal funds are reduced or
increased as the case may be, and the amount.”
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BORROWER’S COVENANTS IN A CHARGE

Section 88 (i) to (j) of the Land Act No.6 of 2012

It is important that the security remains adequate throughout the period of the loan.
Therefore, the Lender needs to insert provisions or covenants to be performed by the
Borrower for the purpose of maintaining the property.

Examples of such covenants include those against sub-letting, requiring the Borrower to
carry out repairs, to insure the property, as well as the covenant permitting the Lender to
enter the premises and inspect them.

The following are selected covenants found in charges:

1. To pay the charge debt as agreed.

2. To duly pay rent, rates or taxes that are payable in respect of the charged property.

3. To keep the charged property in good repair and condition.

4. To permit the Lender or his agents at all reasonable times to enter the premises
and inspect the state and condition of the same.

5. Not to effect any alterations to the charged property without the prior written
consent of the Lender.

6. Not to do anything that would decrease the value of the charged property.

7. Not to transfer, lease, let, sub-let or in any way part with the possession of the
charged property or any part thereof without the prior written consent of the Lender.

8. To insure and keep insured the charged property.

9. Not to apply for nor obtain any advance which would rank in priority to or “pari
passu” with the charge debt.
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BORROWER’S RIGHT

The Borrower has a right to redeem his property. This is referred to as the equity of
redemption. This right must not be fettered:

Section 89(1) of the Land Act No.6 0f 2012 provides that any law entitling a charge
to foreclose the equity of redemption is prohibited. Further, such right exists until the
time the charged land is sold. In a sale by public auction the land is deemed to be sold
when a bid is accepted. The acceptance of the bid at the auction also signifies that a
binding contract has been entered into. (Law of Contract: offer and acceptance = binding
contract)

LENDER’S OBLIGATION

Section 102(2) (a) and (b) of the Land Act No.6 of 2012

The Lender/Chargee has the obligation to discharge the charged property by delivering
to the Chargor a Discharge of Charge together with all documents of title held by the
Chargee in connection with the charged land.

REMEDIES OF A LENDER

Special Acknowledgement by Chargor

Section 56(1) of the Land Registration Act No.3 of 2012

In order for the Lender/Chargee to exercise its remedies, the Chargor must have signed
the charge and his signature must have been attested and verified as required. In addition,
the charge must contain a special acknowledgement signed by the Chargor that he
understands the effect of the sections providing for the Chargee’s remedies.

Statutory Notice to Remedy Default

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Section 90 (1) and (2) of the Land Act No.6 of 2012

If the Chargor defaults in any obligation under the charge or fails to pay any money due
under the charge, the Chargee shall issue a statutory notice of not less than three months.

REMEDIES

Sections 90 – 104 of the Land Act No.6 of 2012

Section 90 (3) - If the chargor does not comply “within three months after the date of
service of the notice” the Chargee may exercise any of the following remedies:

a) Sue the Chargor for any money due and owing under the charge; (Section 91)

b) Appoint a Receiver of the income of the charged land; (Section 92)

c) Lease the charged land; (Section 93)

d) Enter into possession of the charged land; (Section 94) or

e) Sell the charged land. (Section 96)

s. 90. (2) The notice required by subsection (1) shall adequately inform the receipient
of the following matters –

a) the nature and extent of the default by the charger;

b) if the default consists of the non-payment of any money due under the charge, the
amount that must be paid to rectify the default and the time, being not less than
three months, by the end of which the payment in default must have been
completed;

Alfred Osanya vs. Giro Commercial Bank Ltd & Another, Civil Case 112 of
2014 [2014] eKLR, (Havelock J):

"...the 1st Defendant's Advocates do not appear to have appreciated the mandatory
provisions of section 90(2)(b)... The statutory notice does not detail the amount
that must be paid to rectify the default as regards the Term Loans... I find
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that the said statutory notice herein dated 5th September 2013 to be defective and, as a
result, invalid.”

Cieni Plains Company Limited & 2 others v Ecobank Kenya Limited [2017]
Civil Case 316 of 2016 eKLR

“As read together with section 90(3), section 90(2) of the Land Act obligates the chargee
to firstly, state the nature and extent of default. Secondly, where the default
consists of non-payment, to state the amount required to be paid within
three months for the purposes of making good the default or where the
default is non observance of a covenant in the charge, then the notice is to
state what the chargor is to do or desist from doing so as to rectify the
default. Thirdly, the notice ought to state the fact that if the default is not rectified
within the time stated in the notice, then the chargor would thereafter sue for money due
and owing under the charge, appoint a receiver of the income of the security property,
lease the security property, enter into and keep possession of the security property or
sell the security property. The fourth and final requirement under section 90 is
that the notice needs to state that the chargor has the right to apply to court
and seek any relief or challenge the exercise by the chargee of any of the
statutory remedies. The notice crystallizes after the expiry of ninety days from the
date it is received by the chargor.

“There is no requirement that the statutory notice under section 90 be

served upon either the principal debtor or a spouse as was contended by Mr.
Kingara. Any spouse who gave her/his consent to the charge being created is however
to be served with a notice of intention to sell pursuant to the provisions of section 96(3)
of the Land Act which also dictates that any tenants or lessees be also served with such
a notification. This notice is issued after the expiry of the ninety days stated in the
statutory notice.

“Thus even though section 90 appears couched in mandatory terms, its object and
purpose can never be ignored. Where there is substantial compliance with the
section, enough to put the chargor on notice of the chargee’s ultimate
intentions if the notice is not heeded, then such substantial compliance will
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be deemed to have countenanced any alleged deviation, especially at an

interlocutory stage…”

Julius Mainye Anyega vs. Eco Bank Limited [2014] eKLR:

“The true position of the law on matrimonial properties is that a Mortgage will not be
created on such property without first obtaining the consent of the spouse. Similarly, no
sale of the matrimonial property will be carried through without giving the necessary
notices to the spouse or spouses of the Mortgagor. These protections once availed will
not prevent sale of a matrimonial home where the necessary consents have been
obtained and all notices given to all parties with an interest in the matrimonial home,
which is given as security for a loan or credit facility.”

Milimani Motors(k) Ltd v Kenya Commercial Bank Ltd Civil Suit 171 of 2012
[2014] eKLR

“The rigidity of the earlier times concerning errors or omissions in Notices now need to
give way to a new reality viz: It is the imperatives of justice in a given case that must
guide the court on the right decision to make.”

Section 91 (1) The chargee may sue for the money secured by the charge only if—

(a) the chargor is personally bound to repay the money;

(b) by any cause other than the wrongful act of the chargor or chargee, the security is
rendered insufficient and the chargee has given the chargor a reasonable opportunity to
provide additional sufficient security and the chargor has failed to provide that additional
security; or

(c) the chargee is deprived of the whole or part of the security through or in
consequence of, a wrongful act or default of the chargor.

Section 92 (8) – Order of priority of application of money received by the Receiver:

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(a) first, in the payment of all rents, rates, charges, taxes and other
outgoings required to be paid in respect of the charged property;

(b) second, in keeping down all annual sums or other payments, and the
interest on all principal sums, having priority to the charge of which the
receiver is appointed;

(c) third, in payment of the receiver’s commission and expenses;

(d) fourth, in payment of all reasonable expenses incurred in the doing of anything
that a receiver is required or entitled to do in respect of the charged land, including but
not limited to—

(i) the payment of any premiums on any insurance policy properly payable
under the charge instrument; and

(ii) the costs of undertaking necessary and proper repairs to any buildings
comprised in the charged land as directed in writing by the chargee.

(e) fifth, in the repayment of any money paid or advanced by the chargee to meet the
reasonable expenses referred to in paragraphs (a), (b), (c) and (d) together with any
interest on any amount so paid or advanced at the rate at which interest is payable on the
principal sum secured by the charge;

(f) sixth, in payment of the interest accruing due in respect of any principal sum
secured by the charge;

(g) seventh, in and towards the discharge of the principal sum secured by the charge,
and payment of the residue, if any, to the chargor or other person entitled to the charged
land.

David Ngugi Ngaari v Kenya Commercial Bank Limited Civil Case 135 of 2013
[2015] eKLR:

“The principal debtor should be served with the requisite statutory notice to remedy any
default within 90 days, and he should be fully informed of the acts needed to remedy the
default and his right to apply for relief. The notice must fully comply with section 90(1)
of the Land Act… after the borrower has failed to remedy the default in accordance with
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the notice issued under the law, the chargor, who is the guarantor is entitled to a notice
of not less than 40 daysunder section 96(2) of the Land Act before the chargee can sell
the charged property.”

Section 97 –

97. Duty of chargee exercising power of sale

(1) A chargee who exercises a power to sell the charged land, including the exercise
of the power to sell in pursuance of an order of a court, owes a duty of care to
the chargor, any guarantor of the whole or any part of the sums advanced to the
chargor, any chargee under a subsequent charge or under a lien to obtain the
best price reasonably obtainable at the time of sale.
(2) A chargee shall, before exercising the right of sale, ensure that a forced
sale valuation is undertaken by a valuer.

(3) If the price at which the charged land is sold is twenty-five per centum or
below the market value at which comparable interests in land of the same
character and quality are being sold in the open market—
(a) there shall be a rebuttable presumption that the chargee is in breach
of the duty imposed by subsection (1); and
(b) the chargor whose charged land is being sold for that
price may apply to a court for an order that the sale be
declared void, but the fact that a plot of charged land
is sold by the chargee at an undervalue being less than
twenty-five per centum below the market value shall
not be taken to mean that the chargee has complied
with the duty imposed by subsection (1).

(4) It shall not be a defence to proceedings against a chargee for breach of the duty
imposed by subsection (1) that the chargee was acting as agent of or under a
power of attorney from the chargor or any former chargor.
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(5) A chargee shall not be entitled to any compensation or indemnity from the
chargor, any former chargor or any guarantor in respect of any liability
arising from a breach of the duty imposed by subsection (1).
(6) The sale by a prescribed chargee of any community land occupied by a person
shall conform to the law relating to community land save that such a sale shall
not require any approval from a Community Land Committee.

(7) Any attempt by a chargee to exclude all or any of the provisions of this section in
any charge instrument or any agreement collateral to a charge or in any other
way shall be void.

However, the Lender/Chargee is not a trustee of the Borrower because the exercise of the
power of sale by the Lender is for the Lender’s own benefit. See:

Cuckmere Brick Co. v. Mutual Finance Ltd (1971) 2 ALL ER 633:

Per Salmon LJ: ‘a mortgagee in exercising his power of sale does owe a duty to
take reasonable precautions to obtain the true market value of the mortgaged
property at the date on which he decides to sell it. No doubt in deciding
whether he has fallen short of that duty the facts must be looked at
broadly, and he will not be adjudged to be in default unless he is
plainly on the wrong side of the line.

‘…‘It is well settled that a mortgagee is not a trustee of the power of sale for the
mortgagor. Once the power has accrued, the mortgagee is entitled to exercise it
for his own purposes whenever he chooses to do so. It matters not that the
moment may be unpropitious and that by waiting a higher price could be
obtained. He has the right to realise his security by turning it into money when
he likes. Nor, in my view, is there anything to prevent a mortgagee from
accepting the best bid he can get at an auction, even though the auction is badly
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attended and the bidding exceptionally low. Providing none of those adverse
factors is due to any fault of the mortgagee, he can do as he likes. If the
mortgagee’s interests, as he sees them, conflict with those of the mortgagor, the
mortgagee can give preference to his own interests, which of course he could not
do were he a trustee of the power of sale for the mortgagor.’

Standard Chartered Bank v. Walker & Walker (1982) 3 ALL ER 938

Facts

A company issued to the Petitioner, a bank, a debenture giving the Petitioner a charge
over the company's assets in respect of any sums then or in future owing to the Petitioner.
The Defendants were guarantors. The debenture empowered the Petitioner to appoint a
receiver with a provision that any receiver so appointed was to be deemed the company's
agent and that the company alone would be responsible for his acts or defaults. In
November 1980 the Petitioner appointed a receiver who engaged auctioneers to hold a
sale of the company's stock. As the auction was held on a cold day in February (winter)
the proceeds of sale was entirely absorbed by the expenses of realisation and preferential
debts other than that of the Petitioner. The Petitioner claimed the sums guaranteed by
the Defendant and the Defendant subsequently brought an action against P, alleging the
sale was poorly organised and realised at a gross undervalue.

Issues

Whether a receiver realising assets under a debenture owed a duty to both the borrower
and the guarantor of the debt to exercise reasonable care and judgement to obtain the
best price available for those assets; Whether the holder of a debenture could be liable for
the actions of a receiver if the process of receivership was interfered with.

Held

The mortgagor should have leave to defend on the ground that there was an arguable case
that the sale had been negligently handled. A mortgagee can choose his own time for sale.
A lender recovering funds on sale of the mortgaged property must use the proceeds to
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reduce the debt. ‘If it should appear that the mortgagee or the receiver have not used
reasonable care to realise the assets to the best advantage, then the mortgagor, the
company, and the guarantor are entitled in equity to an allowance. They should be given
credit for the amount which the sale should have realised if reasonable care had been
used. Their indebtedness is to be reduced accordingly.’ The mortgagee’s duty is ‘to take
reasonable care to obtain the best price that the circumstances permit’.

Kenya Commercial Bank Limited v. John Osebe (1982) KLR (CA) Civil Appeal No
60 of 1982

Per Hancox, Ag. JA: ‘…the respondent’s property, despite his strenuous efforts to
repay, was sold by auction for about a tenth of the sum which the same Bank,
barely a year later, saw fit to lend on the security of the same property to a
subsequent owner. To say that all the Bank was required to do was virtually to
cover its own outstanding debt is an attitude which I find not only unrealistic, but
also harsh, oppressive and uncompromising in the circumstances of the case. Had
it not been for the point of jurisdiction to award damages, the Judge in my view
delivered a very good judgment, fully sensitive to the rights of the parties and to
the issues before him; and, as I have said, his mind was never directed to this
question, as it should have been. The Bank’s conduct has to my mind been shown
in a most unmeritorious light, and the Judge’s finding that it did not have
sufficient regard to the chargor’s interests on the sale is certainly arguable.’

Section 98 (1) – A sale by the Chargee in exercise of the statutory power of sale may be :

(a) of the whole or part of the charged land;

(b) subject to or free of any charge or other encumbrance or charge having priority to
the chargee’s charge;

(c) by way of subdivision or otherwise;

(d) by private contract at market value;

(e) public auction with reserve price;

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(f) for a purchase price payable in one sum or by instalments; or

(g) subject to any other conditions that the chargee shall think fit, having due regard
to the duty imposed by section 97(1).

Section 101 – Order of priority of the application of the proceeds of sale of charged land:

(a) first, in payment of any rates, rents, taxes, charges or other sums owing and
required to be paid on the charged land;

(b) second, in discharge of any prior charge or other encumbrance subject to which
the sale was made;

(c) third, in payment of all costs and reasonable expenses properly incurred and
incidental to the sale or any attempted sale;

(d) fourth, in discharge of the sum advanced under the charge or so much of it as
remains outstanding, interests, costs and all other money due under the charge, including
any money advanced to a receiver in respect of the charged land under section 92; and

(e) fifth, in payment of any subsequent charges in order of their priority, and the
residue, if any, of the money so received shall be paid to the person who, immediately
before the sale, was entitled to discharge the charge.

If the land is agricultural, the consent of the Land Control Board is required. A
Notification of Sale by Public Auction must also be sent to the relevant District
Commissioner (or the equivalent under the County Government structure) as per the
Auctioneer’s Rules 1997.
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LEASES

Constitution of Kenya 2010, Chapter Five – Land and Environment –

Articles 60 – 72
Land Registration Act No. 3 of 2012 – Sections 54 - 55
Land Act No.6 of 2012 – Part VI – General Provisions on Leases – Sections
2 & 55 -77

LAND REGISTRATION ACT NO. 3 OF 2012 – SECTIONS 54 – 55

Section 54 – Registration of leases

Section 55 – Lessor’s consent to dealing with leases

LAND ACT NO.6 OF 2012 – PART VI – GENERAL PROVISIONS ON LEASES

– SECTIONS 2 & 55 -77

Section 2 - Definitions – lease, lessee, lessor

Section 65 – Covenants implied in a lease on the part of a lessor
Section 66 - Covenants implied in a lease on the part of a lessee
Section 67 – Consent by lessor to application by lessee under lease
Sections 69 – 72 – Transfers and Assignment of leases
Sections 73 – 77 – Remedies and Relief

DEFINITION OF A LEASE

Section 2 of Land Act No. 6 of 2012:

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

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

Definition of Licence

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A licence is defined as a grant under which the grantee takes only the right to use the
premises without exclusive possession. It is a permission given by the proprietor of land
which allows another person to enter upon the land and do something or perform an act
on the land. Without this permission such entry by that other person would be a
trespass. The definition of a licence does not include an easement or profit.

Distinction between a Lease and a Licence

The distinction is important in relation to protected tenancies and also inheritance.

Concerning protected tenancies, the Rent Restriction Act and the Landlord and Tenant
(Shops Hotels and Catering Establishments) Act only give protection to a tenant and not
a licensee.

Concerning inheritance, a lease, can be inherited, assigned or sub-let. A licence, on the

other hand, is a mere personal privilege of occupation and therefore it cannot be the
subject of inheritance or assignment - Aroko v Ngotho & another [1991] KLR

Classification of Leases

1. A lease for a fixed period – This arises in a situation where the landlord and
tenant state in the agreement the specific period for which the lease will be in
existence. Once the period expires the lease determines

2. Periodic tenancies: Section 57 – This is a lease that arises and runs indefinitely
from one period to another. It can run from week to week, month to month, year
to year or any other periodic basis to which the rent is payable (in relation to
agricultural land the periodic lease shall be for six months) but it cannot be for a
period of more than one year. It can be terminated by notice similar to the rent
period

3. Short term leases – A short term lease is a lease—

(a) made for a term of two years or less without an option for renewal;
(b) is a periodic lease; and
(c) which is not in writing.

Bachelor’s Bakery Ltd v Westlands Securities Ltd (1982) KLR 366 elucidates
the status of an unregistered lease:
1. a lease for immovable property for a term exceeding one year can only be made
by a registered instrument;
2. An unregistered lease, does not require to be registered to be enforceable; such
an agreement is valid inter partes even in the absence of registration, but
gives no protection against the rights of third parties.

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Upheld by the CoA in the case of Mega Garment Limited v Mistry Jadva Parbat
& Co. (Epz) Limited, Civil Appeal 68 of 2015 [2016] eKLR

4. Tenancy at Sufferance – This is a tenancy by which a tenant comes into

possession first by lawful lease but continues in possession wrongfully after his
lease has expired. It is also referred to as a “tenancy by holding over.” Under the
Rent Acts such a tenant may become a protected tenant. Also, under Section 60,
LRA, such a tenant becomes a periodic tenant if the lessor consents to his
remaining in occupation.

Aroko v Ngotho & another, Civil Case No 689 of 1991 [1991]KLR:

After the end of a lease, and after the issuance of a notice to vacate the premises, the
landlord continued to accept rent from the tenant for 5 months (Aug 1990- January
1991). There was purportedly a written lease, but none was presented before the Court.
The tenant appealed to the Court to restrain the intended eviction.

Held: “There is no evidence that any lease was infact drawn up. In the absence of a
lease in writing then the lease was a periodic tenancy in terms of section 46 (1) (b) of
the Registered Land Act which period tenancy was a month to month tenancy as the
rent was being paid monthly section 46(1) (c) of the Registered Land Act.* By the same
section such monthly tenancy would be terminated by a one months notice. Similarly it
appears that the second tenancy which took effect on 2/6/89 was not in writing and
so, it became a month to month tenancy terminable by on month notice.”
“Prima facie, it is clear that the tenant held over in terms of section 52 (1) of the
Registered Land Act** and is deemed to a month to month tenant entitled to one month
notice before termination. Section 52(2) of the Registered Land Act makes it absolutely
clear that the landlord’s acceptance of rent after the expiry of the notice to vacate by
1/7/90 should be taken as evidence of the landlord’s consent to continued occupation
by the tenant.”
“In the absence of a written lease, there is an implied agreement between the tenant
and the landlord that so long as the tenant pays rent and observes and performs the
agreements and conditions, the tenant would have peaceful and quiet possession of the
premises without any lawful intersuption by the lesser or any person rightfully –
section 53 (a) RLA.”

* s. 46 (1) (b), RLA = s. 57 (2), Land Act

**s. 52, RLA = s. 60 (2), Land Act

5. Future lease – This is a lease created for a period that is to commence on a

future date. Under S.61, such a lease must commence within 21 years from the

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date of its execution otherwise it will be void. It must also be registered if it is to

last more than 5 years, otherwise it is void.

IMPLIED COVENANTS IN LEASES

The lease executed between the parties will normally contain express provisions,
covenants, agreements and conditions. Where the lease is silent, the covenants provided
for in the Land Act (s. 65 &66).

TENANT’S COVENANTS

1. Covenant to pay rent

The general rule is that the tenant must continue to pay rent during the period of
the lease even if the property is destroyed. This is so because a lease is something
more than a contractual obligation. It creates an estate which is an interest in
land.

There is, however, an exception to payment of rent where the whole or part of the
property is destroyed or damaged e.g. by fire, civil commotion, violence of any
army or of a mob or other irresistible force. These are occurrences which are not
attributable to the tenant’s negligence.

Under the LRA, the rent or any part of the rent depending on the nature and
extent of the damaged shall be suspended and the rent shall cease to be payable
until the property is rendered fit for occupation and use. If it is not so rendered
within six months of destruction, then the tenant may terminate the lease upon
giving the landlord one month`s notice in writing.

2. Duty to pay rates, taxes and other outgoings in respect of the leased
premises during the continuance of the lease unless the same are payable
exclusively by the landlord.

3. Covenant to repair

Where a whole building or a dwelling house is leased unfurnished, the tenant is

responsible for both internal and external repairs: S.66 (1) (c): to keep all buildings
comprised in the lease in a reasonable state of repair.

Where only part of a building is let or where a dwelling house is leased

furnished, the tenant is responsible for internal repairs while the landlord is
responsible for external repairs: S. 65 (1) (c) LRA as read together with S. 66 (1) (c).

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“Keeping a building in repair” means keeping it in such a state of repair as that in

which a prudent owner might reasonably be expected to keep his property, due
allowance being made for the reasonable wear and tear.

Note: The s. 66 (1) (c) states that there shall not be an undertaking to put any
building into a better state of repair than that in which it was at the commencement
of the lease.

Adbulmajid Mohamed Adam v Nimish Shah t/a Flora Printers,

Environment and Land Case 85 of 2017 [2018] eKLR

A tenant made a hole in the wall and put in a door to access an adjoining property
that he had leased from a different landlord. He did this without the consent of the
landlord. The lease was unwritten. Held:

“…it is a breach of the covenant to repair if the tenant pulls down any part of the
premises or makes alterations in them unless he is expressly or impliedly given
power to do so by the lease. Where there was no written lease as in the present
case, consent of the landlord was necessary before such repairs or alterations are
made. There was no consent or authority sought from the Appellant hence the
actions of the Respondent amount to a breach of the lease.”

Owuor v Kenya Medical Research Institute,Malaria and Other Protozol

Diseases Research Center[1988] eKLR

“…a landlord cannot refuse to accept possession of the premises because the tenant
committed a breach of the covenant to repair.”

5. Covenant to permit landlord or his agent with or without workmen at all

reasonable times to enter the leased premises and inspect or examine the same.

6. Covenant not to transfer, charge, sub-let or otherwise part with

possession of the leased premises without the landlord`s written
consent: consent not to be unreasonably withheld- s. 67, LA. Consent is
withheld unreasonably, inter alia, if there is some unreasonable requirement-
payment of extra unjustifiable amount, imposition of some unreasonable
precondition, or refusal to consent to the sublease because of discrimination
against the sublessee.

New Calabash Limited v Joseph Odero, Environment and Land Appeal

49 of 2017 [2018] eKLR

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“…subletting of the demised premises without the written consent of the lessor was
expressly prohibited and is a covenant the appellant agreed to abide by. The
appellant in blatant breach of that covenant leased the suit premises to various
sub-tenants some of whom erected their own structures on the suit
premises…The subletting would have been faultless had the appellant obtained
prior written consent from the respondent in tandem with the covenants in the
tenancy agreement. In the present appeal, the tenant did not obtain the
consent.”

Where there is no consent to a sublease, there is no privity of tenancy (Westlands

Triangle Properties Ltd v Westlands Sundries Limited & 2 others,
Environment and Land Suit 112 of 2008 [2020] eKLR- citing with approval
Martin M. Odhiambo t/a Express Insurance Services vs Marshalls E.A
Limited & Another [2005] eKLR)

LANDLORD’S COVENANTS

1. Quiet enjoyment S.65 (1) (a)

This covenant is to the effect that the landlord guarantees that the tenant shall have
quiet enjoyment of the property so long as the tenant pays the rent and performs the
covenants to be performed on his [Link] covenant constitutes the right to exclusive
possession. The landlord has no right to intimidate the tenant. He must not e.g. remove
property or items or services from the leased premises with the intention of indirectly
forcing the tenant to leave.

2. Covenant not to derogate from the grant S. 65 (1) (b)

This is an extension of the covenant for quiet enjoyment. The landlord must not use or
permit to be used any adjoining or neighbouring land of which he is the proprietor in
any way which would render the leased premises unfit for the purpose for which they
were leased. The landlord must not frustrate the use of the land for the purpose for
which it was let. See:

Birmingham Dudley & District Banking Co. v Ross [1888] 38 Ch. D 295

Bowen, LJ. Stated: “A grantee having given a thing with one hand, is not to take away
the means of enjoying it with the other.”

In Aldin v. Latimer (1894) Ch. 437, A landlord leased certain premises to a tenant for
the purpose of carrying out the business of a timber merchant. He then put up buildings
on adjoining, land in such a way as to interrupt the free flow of air to the drying sheds.

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Held: The landlord’s assignees were liable in damages for the breach of the implied
covenant not to derogate from the grant.

IPA LABORATORIES LTD. V SPRINGFIELD PROPERTIES LTD. & ANOR.

[1999] eKLR

where a landlord who had covenanted not to rent out a commercial space on the same
floor to another tenant running the same business as the tenant (a chemist) proceeded
to do so, the landlord was found in breach of the covenant. A permanent injunction was
granted against the landlord from renting to the proposed tenant or any other tenant
conducting similar business as the Plaintiff.

3. Covenant that premises are fit for habitation - LA S. 65 (1) (d)

It applies where a dwelling house, flat or room is let furnished.

4. Duty to repair- LA S. 65 (1) (c)

It applies where only part of a building is let or where a dwelling is leased furnished.
Here, the landlord is responsible for external repairs. The landlord is required to keep
the roof, main walls, main drains, common passages and common installations in
repair.

ASSIGNMENT OF LEASES

Ss. 66-72

Definition of Assignment

An assignment occurs where a holder of a leasehold interest transfers it to another

person. It is the transfer of the whole of the interest of a lessor or lessee under a lease to
a third party.

An assignment therefore takes place when a third party takes the identical term which
the lessor or lessee holds in respect of a leasehold interest.

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

The whole interest must be transferred. The lessor must assign the whole of his interest
including the reversion. The lessee must assign the whole of his term. If there is a
remainder of the term, the whole remainder must be assigned. There would be no
assignment if the assignor were to reserve a part of the term for himself.

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Old tenant to new tenant requires consent of the landlord

An assignee can therefore be:

• A third party to whom the lessor passes the reversion; or

• A third party to whom the lessee passes the term of years.

Privity of contract and Privity of Estate

Assignment raises the question as to whether or not covenants or agreements implied or

expressed in a lease retain their effect after the original lease has been assigned to a
third party by either the lessor or lessee. The answer to this question is determined by
the common law doctrines of privity of contract and privity of estate See:

Souza Figuerido v. Panagopolous [1959] EA 756

This case discusses privity of contract and privity of estate.

Privity of Contract

It exists between people who have entered into contractual relations, i.e. where there is
an agreement between the parties, e.g. Between: Landlord and Tenant, Tenant and Sub-
Tenant.

Under the doctrine of privity of contract, only the contracting parties can sue or be sued
on the contract.

Privity of Estate

It exists between two people, one of whom holds the reversion while the other holds the
original term or remainder created by the lease. It exists between the Landlord and
Tenant’s Assignee or the Tenant and Landlord’s Assignee.

In the absence of an assignment, the law states that there is both privity of contract and
of estate between parties to a contract.

At Common Law, Privity of contract between Landlord and Tenant subsists even after
assignment of their respective interests. Liabilities do not pass to the Assignee.

The LA repeals this Common law rule (expressly in Section 71 (1)). It provides that
upon assignment (transfer), the lessor or lessee shall cease to be subject to any of the
liabilities imposed upon him by the lease. Further, the Transferor shall cease to be under
any obligation or possessed of any rights in respect of the Lease. However, nothing shall
affect the obligations of the transferor to pay rent or remedy a breach of covenant
expressed or implied in the Lease which occurred before assignment.

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When the Lessee (Tenant) assigns his Lease, he loses Privity of Estate between him and
the Lessor (Landlord) or the Landlord’s Assignee. Under Privity of Estate, the Tenant
cannot therefore be sued by the Landlord or Landlord’s Assignee for breaches
committed by the Tenant’s Assignee. Equally, the Tenant’s Assignee cannot sue the
Landlord or the Landlord’s Assignee for breaches committed before the Assignment.

SOUTH C FRUIT SHOP LIMITED V HOUSING FINANCE COMPANY OF

KENYA LIMITED [2013] eKLR

Facts: South C Fruit Shop had rented premises from a M/s Wamae, who had charged
the property to HFCK. South C Fruit Shop had no notice of the charge. M/s Wamae was
unable to settle the charge debt, and HFCK took steps to take possession of the suit
property. HFCK then proceeded to evict South C Fruit Shop, and in the process, some of
the property of the latter was destroyed. South C Fruit Shop sued HFCK, claiming not to
have been given notice of the eviction. HFCK claimed to have given notice to M/s
Wamae, and claimed that that was sufficient.

Held: the Court of Appeal reversed the judgment of the High Court that Privity of Estate
operated so as to put South C Fruit Shop in the shoes of M/s Wamae. It instead applied
the principle to put HFCK in the shoes of M/s Wamae, becoming South C Fruit Shop’s
new landlord and therefore requiring notice before the termination of the lease:

“In so far as the appellant was concerned, the respondent was a stranger with no
capacity to enforce the relationship between the tenant and landlady. There was no
notice given by the person who put the appellant into the premises. There is no
evidence that the respondent had taken over the rights and liabilities of the legitimate
owner of the premises. It was not possible for the appellant to know that its
relationship with the former landlady was terminated or taken over by a
new entity. If it was done, the parties had an obligation and/or
responsibility to bring it to the attention of the appellant. That was not
done, consequently we are entitled to conclude that the appellant had no
knowledge or notice in the relationship between the respondent and the
former owner of the premises... A court of law cannot condone and/or
countenance such an illegality.”

PROCEDURE FOR LEASES

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The first step is usually taken by the Landlord when he advertises his premises for
letting. Alternatively, he may engage an estate agent to advertise on his behalf.

Where a prospective tenant is satisfied with the premises, the Landlord will inform his
Advocate that he has agreed to grant a Lease to the Tenant and would like the Advocate
to act for him (the Landlord).

Generally in practice, the Landlord’s Advocate drafts the Lease. Since the Landlord
retains the reversion when he grants a lease, it is for him to indicate what he is willing to
grant and on what terms. See: Rule 24 of the Advocates Remuneration Order under the
Advocates Act (Cap 16).

Unless otherwise agreed, all conveyancing documents shall be prepared by the

advocate of the parties as follows—

(a) conveyance or transfer or assignment ....advocate of the purchaser or party to

whom property is conveyed, transferred or assigned;

(b) mortgage or charge ..........advocate of mortgagee or chargee;

(c) release or discharge .........advocate of party in whose favour release or

discharge is given;

(d) Lease ................advocate of lessor;

(e) all other documents ........advocate of the grantee or obligee, unless express
provision to the contrary is made elsewhere in this Order.

Particulars required by the Landlord’s Advocate

To enable the Landlord’s Advocate to draft the Lease document he requires the
following particulars:

1. Full names and address of the Landlord.

2. Full names and address of the Tenant.
3. Name and address of the Advocate for the Tenant, if any.
4. Particulars of the property and whereabouts of documents of title.
5. If a portion of a building is being leased the Landlord`s Advocate requires an
architect’s plan for registration under the RDA.
6. The term of Lease and date of commencement.
7. Rent: Amount and mode of payment – monthly, quarterly, etc. and whether
payable in advance or arrears and on what days of the month.
8. Covenants to be performed and observed by both parties.

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9. Whether there is any option for renewal and if so, its terms.

Option to Renew Clause

Usually, the Landlord agrees to grant a further term containing the same covenants and
agreements as those contained in the Lease except for the clause regarding the option to
renew.

The inclusion of this exception is desirable to exclude any possibility of a perpetual right
of renewal. The clause should state the mode of exercising the option to renew. It
should also define the time limit within which the option is to be exercised. The clause
should also contain a formula for determining the rent.

An option is defined as “an irrevocable offer which, if properly exercised, becomes a

binding contract.”

Once the Landlord’s Advocate has obtained the necessary particulars, he will write to
the Tenant of his Advocate, if any, informing him that he understands that the parties
have agreed to the proposed lease, that he has been instructed by the Landlord and that
he will shortly submit a draft lease to the Tenant or his Advocate for approval.

The terms of any correspondence between the parties or their Advocate are important.
This is because a contract may have to be implied in the correspondence if the draft
lease is not approved or signed.

The party seeking to specifically enforce the contract may have to rely on the
correspondence as constituting the contract, note or memorandum, required under
S.3(3) of the Law of Contract Act (Cap 23).

Duties of Landlord’s Advocate

After receiving instructions from the Landlord and communicating with the Tenant or
his Advocate the Landlord’s Advocate will carry out the following:

1. Obtain Documents of Title

2. Draft the Lease
3. Send it to the Landlord for approval if necessary
4. Send it to the Tenant or his Advocate for approval
5. Make any necessary amendments proposed by the Tenant or his Advocate: Note:
These must be approved by the Landlord.
6. Engross the document.
7. Prepare and send a completion statement to the Tenant’s Advocate requesting for
funds for stamp duty and registration fees.
8. Obtain relevant Consents and Clearance Certificates.

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9. Forward the engrossed Lease to the Tenant or his Advocate for execution and
attestation/verification as required.
10. Have the Lease executed by the landlord and attested/verified as required.
11. Stamp the document and lodge it for registration.
12. Obtain any fees, complete filing and dispose of document as instructed.

The Advocate may also be required at a later stage to draft a Renewal of Lease. He may
also be required to approve an Instrument /Deed of Surrender

Duties of the Tenant’s Advocate

1. Investigation of the Landlord’s title to determine:

- Whether the Landlord has capacity to grant the Lease
- Whether there are any encumbrances
- What consents are required
- Whether there are any restrictions or provisions regarding the user of the
premises and therefore whether the land can be used for the purposes intended
by the tenant.
2. Approval of the draft lease
3. Ensure that the necessary consents have been obtained by the landlord
4. Obtain the necessary funds for stamp duty and registration fees from the Tenant
5. Have the Lease duly executed by the Tenant and attested as required
6. Obtain his fees, complete filing and dispose of documents as directed

Later: Approval of Renewal of Lease or Drafting of Instrument of Surrender, engrossing

and having it executed by Tenant, stamping and registering it.

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TERMINATION OF LEASES

- No fault on either side

1. By expiry or effluxion of time:
A lease or tenancy for a fixed term automatically terminates on the expiry of the stipulated
period without any requirement that the tenant should be given any form of notice to quit.
Similarly, when an event upon which the lease is expressed to come to an end has occurred
then the lease terminates automatically. For example, a lease for the life of the lessee
terminates automatically upon the death of the lessee.

2. By notice – ie. Notice to quit

Essentially, a notice to vacate the premises is required where the lease is for a fixed term,
if such was prescribed in the lease agreement. Pursuant to the LA, a lease is determined
where a notice duly given to determine the lease has expired. A Periodic tenancy does also
require notice of termination.

Rajwani v Roden: Law JA held that a tenant cannot put an end to a tenancy from month
to month without giving a valid notice, and the tenancy persists until a valid notice is
given or the landlord re-enters.

3. By forfeiture: s. 73, LA- arises where the lessee:

a) Commits any breach under the lease;
b) Is adjudged bankrupt; or
c) Being a company, goes into liquidation.
The right of forfeiture upon arising may be enforced by a court action by either the lessor
or his agent. Under section 73(3), this right to forfeit cannot be waived by accepting rent
arrears unless the landlord otherwise by other conduct shows that she is still treating the
lease as subsisting (s. 75). Forfeiture is undertaken either by peaceable re-entry of the
premises by the lessor where the lessee is in occupation or by a court action i.e. an action
for eviction- s. 73 (2).
 4. By surrender – a surrender of the tenant’s interest to his immediate landlord. If
the landlord accepts surrender, the tenant’s term of years merges forthwith in the
landlord’s reversion and is extinguished.

Halsburys Laws of England vol 27 at paragraphs 444-450:

“A surrender is the yielding up of the term of the lease to the person who has the
immediate estate in reversion in order that, by mutual agreement, the term may merge
in the reversion. The surrender may be either express, that is by an act of the parties
having the expressed intention of effecting a surrender, or by operation of law, that is
as an inference from the acts of the parties.

Surrender may be express or implied.

Express Surrender

Express surrender may be effected in two ways:

(i) By a written instrument duly executed and registered; or

(ii) By writing the word “Surrender” on the Lease and signing against it.

In practice, instruments of surrender are drawn by Advocates and are then signed attested
and registered.

Implied Surrender: This occurs:

(i) Where the tenant vacates the premises with the consent of the Landlord: or
(ii) Where the Landlord grants to the tenant a new lease which commences during
the subsistence of the original lease; or
(iii) Where a lease is granted by the landlord to a third party with the consent of the
Tenant.
Moses Wachira Wamunyu vs Fredrick Kagio Kinyua & 4 Others (2001
Unreported):
the case involved a protected tenancy under the Landlord and Tenant (Shops, Hoteals
and Catering Establishments) Act. The landlord served the Plaintiff with a notice of
termination of tenancy under s. 4(2) of the Act. The tenant filed suit challenging the notice
at the Business Premises Rent Tribunal. From the correspondence passing between the
Plaintiff’s Advocates and the Defendants’ Advocates, it became apparent that the parties
were negotiating the termination of the tenancy but the result of that negotiation
remained unclear as none was recorded in the Reference before the Tribunal. The tenant
was nevertheless removed from the demised premises and a new tenant put therein. At
the hearing hereof before the plaitiff argued that he had been evicted unlawfully and thus
prayed that he be reistated to the suit premises. On their part, the defendants argued that
the Plaintiff had not been evicted illegally but had himself surrendered the tenancy.
Alnashir Visram J held as follows:
“The negotiations between the parties were no doubt an effort directed at the surrender
of the tenancy…It has already been seen that these negotiations were never completed
– at least nothing formal came of them. In that case, there can be no surrender. This,
therefore, means that the Plaintiff was never lawfully put out of possession of the
demised premises.”

5. By merger: This is where the reversion and the term of the lease are both vested in
the tenant.

THE RENT ACTS

The purpose of these Acts is to protect tenants from being exploited by Landlords and also
against eviction. The tenancies to which these Acts apply cannot be terminated under the
normal rules relating to leases. The two Acts are as follows:

Rent Restriction Act (CAP 296) – Residential Premises

Landlord and Tenant (Shops Hotels and Catering Establishments) Act (Cap 301) –
Business Premises

THE RENT RESTRICTION ACT (CAP 296)

The Rent Restriction Act (Cap 296) protects tenants of dwelling houses or residential
premises. The effect of this protection is that a tenant cannot be evicted without an order
of the Rent Tribunal.

Section 3(1) of the RRA provides that this Act will apply to all dwelling houses except:

(a) Excepted dwelling houses (excepted by the Minister)

(b) Dwelling houses which are let on service tenancies
(c) Dwelling houses having a standard rent exceeding KShs. 2,500/= per month
whether furnished or unfurnished.

THE LANDLORD AND TENANT (SHOPS, HOTELS AND CATERING

ESTABLISHMENTS) ACT (CAP 301)

This Act protects tenants of business, office or commercial premises. The protected
tenants are referred to as controlled tenants. They cannot be evicted without the order of
the Business Premises Tribunal.

Section 2 of the Act provides that a controlled tenancy means a tenancy of a shop, hotel
or catering establishment

(a) Which has not been reduced to writing; or

(b) Which is in writing and which:
i. Is for a period not exceeding 5 years; or
ii. Contains a provision for termination otherwise than for a breach of
covenant within 5 years from the commencement thereof; or
iii. Relates to premises which the Government may specify as controlled.

ENFORCEMENT BY THE LANDLORD

1. Distress for Rent:

Distress is the right to remove certain goods or chattels from the possession of the tenant
in order to compel him to pay the rent due. It is a common law remedy to “summarily
seize goods found on the demised premises, sell them up and recoup from the proceeds
of sale any arrears of rent owed by a tenant.”
s. 3(1), Distress for Rent Act (CAP 281): ‘Subject to the provisions of this Act, any person
having any rent or rent service in arrear and due upon a grant, lease, demise or contract
shall have the same remedy by distress for the recovery of that rent service as is given by
the common law of England in a similar case’.

s. 4, DRA: Good seized can only be sold after 10 days, and only if arrears are not settled
by tenant.
Gusii Mwalimu Investment Co. Ltd and 2 others v Mwalimu Hotel Kisii Ltd:
CoA expounded on s. 4 of the Act, saying it“clearly envisages having goods at the
premises in question for at least ten (10) days to enable the tenant either to pay the rent
or replevy them. It does also envisage impounding of goods within a limited area of the
premises. But this sub-section does not empower a bailiff to remove the goods or chattels
for storage elsewhere without the consent of the owner. The tenor of the whole section 4
of this Act is that the goods or chattels seized should remain in situ for 10
days.”

S. 5, DRA: no distress can be levied 6 months after the end of the lease- Gusii Mwalimu
Investment Co. Ltd and 2 others v Mwalimu Hotel Kisii Ltd

s. 7, DRA stipulates the penalty for unlawful removal of goods, distrained upon for rent
from any place where they or any of them are lawfully stored or detained. Such an offender
is liable to pay to the person(s) aggrieved by the removal treble the value (3x the value)
of distrained property which had been removed. This is a criminal offence, and not
available as a civil remedy.

Fatemi Investments Ltd v Bayusuf: a civil suit for the recovery of treble the value of
distrained property which had been unlawfully removed was dismissed.

To take away the goods from a property that is under distress for rent, a certified bailiff
must be employed.
Nthenge v Wambua: where a person is not empowered to act as a bailiff in accordance
with section 18 of the Distress for Rent Act, then he couldn’t purport to discharge the
functions of a bailiff under the Act. A bailiff under the Act is appointed by the High Court
and not the Business Premises Rent Tribunal created under Landlord and Tenant (Shop,
Hotels and Catering Establishments) Act.

Wildlife Lodges Ltd T/a Landmark Hotel v Jacaranda Hotel Ltd: a landlord
cannot distrain and exercise a right of re-entry or forfeiture for non-payment of rents but
he may and usually does join an action for arrears in an action for forfeiture.
If a certified bailiff is not employed, and the distress for rent is carried out by entering
into the premises, the landlord may be guilty of the criminal offence of forcible entry
under s. 90 of the PC.

Gusii Mwalimu Investment Co. Ltd and 2 others v Mwalimu Hotel Kisii Ltd:
“To obtain possession by levying illegal distress is per se wrong. It is also wrong for a
court bailiff (in this instance it was mischievous) to cart away the tenant's goods under
the guise of such distress. That is what exactly happened here… I have no hesitation
whatsoever in holding that the landlord did all it could to obtain the possession
unlawfully and the learned judge was entirely right in making the orders he made. If
what the landlord did in this case is allowed to happen we will reach a situation when
the landlord will simply walk into the demised premises exercising his right of re-entry
and obtaining possession extra-judicially. A court of law cannot allow such state of
affairs whereby the law of the jungle takes over. It is trite law that unless the
tenant consents or agrees to give up possession the landlord has to obtain
an order of a competent court or a statutory tribunal (as appropriate) to
obtain an order for possession.”
 2. Forfeiture

Forfeiture allows the landlord to re-enter the premises, making the lease voidable at the
landlord’s option if the tenant breaks a covenant. It is what is also called the eviction of a
tenant. Almost all well drafted leases contain a stringent forfeiture clause which
provides that in the event of any breach by the tenant

‘it shall be lawful for the landlord to re-enter upon the demised premises and
peaceably to hold and enjoy the demised premises henceforth as if this lease had not
been made and the term hereby granted shall absolutely determine...

S. 73 Land Act: forfeiture is available to a landlord if the tenant breaches the lease or is
adjudged bankrupt (or is liquidated for a company). Forfeiture is initiated by serving
upon the tenant a Notice of Forfeiture.

s. 75 of the Land Act:

75. Notice before forfeiture

Notwithstanding anything to the contrary contained in the lease, no lessor shall be

entitled to exercise the right of forfeiture for the breach of any agreement or
condition in the lease, whether expressed or implied, until the lessor has served on
the lessee a notice of not less than thirty days—

(a) specifying the particular breach complained of; and

(b) if the breach is capable of remedy, requiring the lessee to remedy the breach
within such reasonable period as is specified in the notice; and

(c) in any case other than non-payment of rent, requiring the lessee to make
compensation in money for the breach,

and the lessee has failed to remedy the breach within thirty days thereafter, if it is
capable of remedy, and to make reasonable compensation in money.

As per s. 73 (2) of the Land Act, acceptance of rent after service of a notice of forfeiture
under s. 75 does not operate as a waiver of the right to forfeiture unless the lessor has by
some other positive act shown an intention to treat the lease as subsisting. S. 74, LA:
forfeiture ends (ends=determines) a lease, unless it is set aside or stopped by a Court. A
court can set aside a proposed/completed forfeiture if it finds that it was fraudulent (s.
74), or for any other reason (s. 76, LA). The procedure of applying for the
reversal/cancelation/stopping of a forfeiture is called applying to the Court for relief.

3. Action for Recovery of Rent Arrears

An action for recovery of arrears may only be instituted subject to the six years limitation
period stipulated by the Limitation of Actions Act (Cap 22). This action may not be
brought where the landlord has already distrained, unless the seized goods or chattels
have already been sold and found to be of inadequate value.

4. Action for Damages

It is instituted for any other reason other than for non-payment of rent. Damages are
usually assessed on contractual basis. For breach of the covenant to repair, the damage
is assessed in relation to the value of the property at reversion- at the end of the lease,
not at the beginning (ideally, this assessment takes into consideration normal wear and
tear).