Validity Of Land Sale Agreement In Kenya (A Helpful Guide)

Validity Of Land Sale Agreement In Kenya (A Helpful Guide)

Validity Of Land Sale Agreement In Kenya (A Helpful Guide)

Validity Of Land Sale Agreement In Kenya

The validity of a land sale agreement in Kenya is determined by adherence to the legal and contractual procedures outlined above. Failure to comply with these procedures may lead to future conflicts and potential double loss.

The validity of a land sale agreement in Kenya is governed by several legal requirements. The law mandates that any land transaction must be in writing, signed by all parties involved, and witnessed. The agreement should also be stamped at the lands registry to ensure legal compliance and validity.

The land sale agreement should include the names and addresses of the buyer and seller, the property title number, and the agreed purchase price. It is advisable, though not mandatory, to have a lawyer involved in the process.

According to the tariff provided by the Law Society of Kenya, the lawyer should charge Ksh3000 if the land cost is Ksh1,000,000 and below, and Ksh8,000 if the land value is above Ksh1,000,000. The lawyer’s cost is typically shared equally between the buyer and seller

Before signing a land sale agreement, the buyer should conduct due diligence. This includes verifying the existence and true ownership of the land, its actual boundaries, its ownership history, its current market value, and the general status of the land.

A search at the Ministry of Lands at district or county headquarters can help ascertain the true land owners and establish the presence of brokers.

It can also reveal if the title has been charged or has a caveat, for instance, when it has been used to secure a loan, or there is a court order barring any transaction on the land.

After the agreement is signed, it should be presented for stamp duty at the nearest lands registry within 30 days.

Following this, the buyer should do another search with the Ministry of Lands to confirm that the land now reads his/her details.

Here are the key points in summary:

  • A land sale agreement in Kenya is a legally binding contract between the seller and buyer that outlines the terms and conditions of the sale. It is required by law for all land transactions.
  • The agreement should contain details of the parties, land description, purchase price and payment terms, duties of each party, dispute resolution, and execution details like completion date.
  • It is highly advisable for both parties to hire lawyers to draft the agreement. The Law Society of Kenya has standard conditions of sale that are usually incorporated.
  • The buyer should conduct due diligence by visiting the land, checking ownership records at the Lands Registry, obtaining maps, and verifying any encumbrances.
  • The agreement should be signed by both parties in the presence of a witness and stamped at the Lands Registry within 30 days to be legally enforceable.
  • The agreement protects both parties’ interests in case of disputes and ensures the transaction is completed as outlined.
  • Having a proper sale agreement is crucial when buying land in Kenya to avoid fraud and ensure the transfer of ownership is valid. Engaging lawyers provides legal guidance in drafting a comprehensive agreement.

What Are The Key Elements Of A Valid Land Sale Agreement In Kenya?

A valid land sale agreement in Kenya is a legally binding contract between the seller and the buyer that outlines the terms and conditions of the sale. The key elements of a valid land sale agreement in Kenya include:

  • Parties Involved: The agreement should clearly state the names of the seller and the buyer.
  • Description of the Land: The agreement should contain a detailed description of the land being sold. This includes the size, location, and any unique features of the land
  • Purchase Price and Payment Terms: The agreement should clearly state the purchase price of the land and the terms of payment. This includes the amount of the deposit, the balance, and the due dates for these payments.
  • Duties of Each Party: The agreement should outline the responsibilities of each party. For example, the seller is required to disclose any defects on the title, such as if it’s being used as a security against a bank loan.
  • Dispute Resolution: The agreement should provide the preferred mode of dispute resolution such as mediation, arbitration, or even resolution through courts
  • Execution Details: The agreement should specify the completion date and other execution details. It should be signed by both parties in the presence of a witness and stamped at the Lands Registry within 30 days to be legally enforceable.
  • Stamp Duty: The agreement should clearly state who is responsible for paying the stamp duty to avoid confusion. In Kenya, this fee is typically paid by the purchaser of the property to the government based on the current value of the property.
  • Law Society Conditions: The Law Society of Kenya has standard conditions of sale that are usually incorporated into the agreement.

It is highly advisable for both parties to hire lawyers to draft the agreement to ensure all legal requirements are met and to prevent a possible conflict of interest.

The buyer should also conduct due diligence by visiting the land, checking ownership records at the Lands Registry, obtaining maps, and verifying any encumbrances.

What Is The Difference Between A Land Sale Agreement And A Land Transfer Agreement In Kenya?

A land sale agreement is used to outline the terms and conditions of the sale, while a land transfer agreement is used to officially transfer the ownership of the land from the seller to the buyer. Both documents are essential in the land buying process in Kenya and must be properly executed to ensure a smooth and legal transaction

A land sale agreement and a land transfer agreement in Kenya serve different purposes and occur at different stages in the land buying process.

A land sale agreement is a legally binding contract between the seller and the buyer that outlines the terms and conditions of the sale. It includes details such as the names of the parties involved, a description of the land, the purchase price and payment terms, duties of each party, dispute resolution methods, and execution details.

This agreement is signed after the buyer and seller have agreed on the price and terms of the sale, and after the buyer has paid the stamp duty to the Kenya Revenue Authority.

The land sale agreement is crucial as it binds the parties to the sale and sets out all the essential terms of the transaction and the rights/obligations of the parties

On the other hand, a land transfer agreement (also known as a land transfer form or executed transfer instrument) is a document that is used to officially transfer the ownership of the land from the seller to the buyer. This agreement is signed after all payments have been made and the sale agreement has been fulfilled.

The seller signs the land transfer forms, which, along with other necessary documents such as consent from the Land Control Board, land search, clearance from county/municipal council, passport photos, Kenya Revenue Authority (KRA) PIN, agreement, and old title deed, are taken to the Ministry of Lands to change ownership.

The transfer of ownership typically takes about three weeks and costs between 1,000 to 2,000 Kenyan shillings, varying by county.

What Are The Consequences Of An Invalid Land Sale Agreement In Kenya?

Here are some potential consequences of an invalid land sale agreement in Kenya:

  • The sale agreement can be voided or cancelled if found to be invalid. This means the ownership of the land does not change hands.
  • The seller remains the lawful owner of the land, even if some payment has been made by the intended buyer.
  • The buyer may not be able to register the land title in their name if the sale agreement is invalid.
  • The buyer loses any deposit or funds paid to the seller under the invalid agreement.
  • Legal disputes may arise between the buyer and seller over the invalid agreement. This can lead to lengthy court cases.
  • If the seller sold the same land to multiple buyers using invalid agreements, it can result in complex legal issues.
  • Fraud charges could potentially be filed if it is determined one party knowingly entered into an invalid agreement.
  • The buyer may not be able to obtain financing or loans for the land purchase with an invalid agreement.
  • Uncertainty over the actual ownership status of the land going forward.
  • An invalid agreement does not provide legal protection or recourse to either party.

To avoid such problems, it is advisable to thoroughly vet land sale agreements and ensure they comply with Kenya’s land laws and title transfer requirements before entering into one. Hiring a real estate lawyer can also help review agreements.

Does A Sale Agreement Expire In Kenya?

The validity of the sale agreement is three years and it gets expired after the lapse of that period. Here are some key points about sale agreements expiring in Kenya:

  • In Kenya, a registered sale agreement is valid for 3 years from the date of execution according to the Limitation of Actions Act. After 3 years, the agreement expires and is no longer enforceable.
  • The parties can mutually agree to extend the validity period beyond 3 years by signing an addendum or new sale agreement.
  • If the sale agreement contains a specific expiry clause, the agreement will expire on the date specified in the contract even if less than 3 years.
  • For a sale agreement to be legally enforceable in Kenya, it must be in writing, signed by both parties, and witnessed.
  • Once a sale agreement expires, the buyer and seller have no further obligations to each other under that agreement.
  • If the property sale does not complete before expiration, the buyer’s deposit is normally refunded.
  • An expired agreement can be revived and enforced if the parties consent and sign a new agreement with updated terms.
  • Registering the sale agreement with the government extends the validity indefinitely until the transfer is completed.

So in summary, a registered sale agreement in Kenya typically expires after 3 years unless otherwise specified in the contract. Registration makes the agreement valid definite for a limited time.

 

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