Due Diligence on Land Transactions

Due diligence entails digging deeper to understand property issues that could be a cause of conflict in the future, this may include establishing the identity of the original and the current owners, the actual size of the land and whether or not the paperwork is in order.

Let us help you conduct due diligence

Reasons for Due Diligence

  • To ascertain potential defects in the transaction deal thus averting risks. 
  • Managing a transaction risk and reduces uncertainty risks for investors. 
  • Helps a client achieve best value for a transaction 
  • Helps a client make a more informed decision pertaining the intended transaction. 
  • Allows a buyer to feel more comfortable on their expectations regarding the transaction. 

Various steps in conducting due diligence

Request for a copy of the title of the land from the vendor/ vendor’s advocate. With the title copy, proceed to either electronically apply for an official search ( if the land is in Nairobi or other digitally-enabled registries) or by making a physical application for official search.

The results of the official search will contain:

a) The name of the registered proprietor/owner of the land.

b) Any encumbrances over the land such as charges, registered caveats, cautions, or restrictions on the land, as well as other third-party rights such as existing easements and licenses.

c) If the property is a government lease, the remaining duration of the lease.

this helps to ascertain whether or not land rates have been paid and are up to date and to confirm the registered “user” of the land. 

Needed:  

Copy of National Identity Card of the proprietor 
The most recent rates receipt 
Proof of ownership such as a copy of the Title Document

A Rates Clearance Certificate will be required before the title is transferred to the buyer; It is the duty of the seller of the land to clear all rates.  

This will aid the buyer to ascertain the designation of the land and to examine whether the buyer’s intended exploitation of the land, conforms to its designated use.

It is important for the buyer of the land to verify the authenticity of the seller’s identity documents before proceeding with the transaction.

This is necessary because there are fraudsters impersonating the actual owners of land in order to defraud unsuspecting members of the public.

In this step, the buyer will purchase a Deed Plan from the relevant county surveyors office.

A Deed Plan is a map that shows the dimensions of the land, as well as the various measurements, sizes, and bearings on the land.

The buyer will then hire the services of a surveyor who will physically visit the location of the land to ascertain that the demarcation beacons are in the right places and have not been tampered with.

In this step, the buyer will visit the various utility companies (e.g. water & electricity) to establish whether there are pending unpaid utility bills. This is important for the buyer to avoid taking over bills that he/she did not incur. 

Due diligence may also involve a physical visit to the property to check on boundaries, area, seeking information from locals, neighbours, checking whether the land is on a road reserve, access roads, Etc…

  • Checking through the Report of the Commission of Inquiry into the illegal or irregular Allocation of Public Land (the Ndungu Land Report) and National Land Commission’s Special Gazzette Notice Number 6862 dated 17th July, 2018 on intended revocation of titles.
  • Ensuring the property, charge, transfer or whichever conveyance conforms to the law, particularly the Land Act and the Land Registration Act.
  • Reviewing transfer documents.
  • Perusing the letter of offer and other conveyance documents.
  • Undertakings, letters of guarantee and the like..
  • Status of a company (where the vendor is a company) 
  • Status of leases in cases of leases- lease period, consents
  • Sectional Properties- management company, status of the sectional property… etc..
  • Land Buying Companies- mother title, share certificate, ballots, membership lists and membership number, minutes of meetings. etc
  • Follow up payment of stamp duty and other monies.
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