I have identified a parcel of land on the outskirts of Nairobi whose current owner is planning to relocate abroad. He has decided to sell it to me at a very affordable price as long as I pay him in cash to enable him process his visa application and make other related travel arrangements. However, the title deed is not in his name but they have lived there as a family for many years. Can I proceed and buy?
Investing in property not registered with the Ministry of Lands is a risk prospective real estate investors must avoid.
The desired dream property may cost well below the ever-increasing market price but may turn exorbitant when the long arm of the law catches up.
The forbidden fruit is the sweetest. Many middle-class Nairobians travel to shagz (up country) to buy tracts of unregistered land from villagers. The majority of land in rural areas is not registered because the ‘owners’ mainly inherited from their forefathers.
They lack title deeds of the land they ‘own’ because they were never adjudicated and registered by the government. Currently, slightly over 60 per cent of land in Kenya is unregistered, creating title insecurity and room for conflict in use.
Legally, it is not easy to sell property that is not registered under your name, unless the registered owner gives you the power of attorney to transact on his/her behalf.
It is therefore, more straightforward to buy registered property that has a valid title deed – the advantages outweigh the disadvantages.
For instance, property owners of registered land have security of tenure and a right to indemnity from the government in case of compulsory acquisition. Furthermore, commercial banks and other financial institutions prefer extending loans to clients with valid title deeds as security.
For your information, banks often perform official searches at the Ministry of Lands to prove the validity of property offered as collateral.
On the other hand, investors can also easily secure capital from the moneylenders for the development of their land.
Moreover, dealing in registered property reduces court cases over ownership as the size and owner of the land or home are conclusively established and determined.
A purchaser of property from a registered seller ensures full commercial confidence in the transaction protected by law. For the government, registration makes it easy to identify property owners to levy tax on or rates on the same as land transactions must be registered.
– Harold Ayodo is an advocate of the High Court of Kenya