The importance of extensive Due Diligence in Land Transactions;
Introduction
Due diligence is a phrase used in land transactions and entails establishing the identity of the proprietors of the land, the actual size of the land, whether the land is encumbered, whether the property exists, and whether or not the ownership documents are in order.
Under the principle of caveat emptor, also referred to as buyer beware, the duty to undertake due diligence to ascertain the suitability of land and sufficiently examine the property before making a purchase fall on the purchaser of the land.
Why should due diligence go past land searches?
When considering buying land, it is important to obtain a copy of the title documents from the vendor to enable you to conduct appropriate searches. The first and most significant step involves conducting a search at the Land Registry to confirm whether the vendor is the actual proprietor of the land. The search will also assist in confirming whether the property is charged and whether there are restraints on the land that would prevent any form of dealing with the land.
While an official search in respect of any parcel of land reveals the particulars of the subsisting entries in the land register, due diligence should not end with a standard search. One should extensively investigate the history of a property before purchasing it or signing any agreement pertaining to such land, to ensure their interests are protected. Some of the additional searches / due diligence checks that would aid in determining the status of the property include, but are not limited, to: –
- Searches in the Ndung’u Report – the Report of the Commission of Inquiry into the illegal/irregular allocation of public land widely known as the “Ndungu Report” is a report that details several properties whose title is contested due to land grabbing post–independence. A quick search on the Ndung’u Report will reveal whether the ownership of a land parcel is contested.
- Perusing the Gazette Notice on Conversion and Migration of titles published by the Ministry of Lands and Physical Planning – this search coupled with an official search will also enable the purchaser to determine whether the property is subject to an objection from any other person with an interest in the land.
- Due diligence inspection – this involves the physical surveillance of a property and helps in ascertaining the actual status and dimensions of the property, the boundaries, and beacons, whether there are squatters in the property, and any restrictions in accessing the property.
- Inquiries into unpaid land rates or rent – for parcels of land that are subject to land rates and land rent, it would be important to confirm that the payments have been made in full by obtaining a Rent and Rates Clearance Certificate.
Apart from the above due diligence checks, it would be important to also conduct inquiries from third parties such as local administrators, estate welfare associations, or the local wananchi to confirm whether the property is subject to local disputes that are publicly known, that may not appear from the official due diligence checks.
How can we help?
At Riskhouse International, we have a team of professionals with the expertise to help you carry out a detailed search of all aspects relating to the history of that property such as the status of encumbrances over the property, the status of disputes relating to the property, the applicable regulations, and the status of compliance with such applicable regulations relating to the property in question.
To learn more about this service and to catch up on our other news and alerts you can visit our blog on our website at https://riskhouse.co.ke/blog/.