Registration of a Charge
The legal procedure to be followed during the registration of any Instrument creating a Charge is as stipulated below: –
1. Conduct of an official search over the particulars of the title to the property to be charged to ascertain ownership and the nature of any encumbrances that may exist over the property.2. Drawing up of the Instrument of Charge.
3. Execution of the Charge. The Charge is executed by both the Chargor (the person who owns the property being charged) and the Chargee (the lender in whose favour the Charge is created). In certain instances, there will be 3 signatories to the Charge as is the case where the Chargor (the owner of the property over which a Charge is to be created) and the person to whom the funds are lent (borrower) are distinct persons and are hence required to execute the charge together with the Chargee.
4. Obtaining all the necessary consents and clearances to enable the registration of the Charge. In this regard, where land is held under leasehold tenure then the consent of the Lessor to the Charge is required together with a Land Rent Clearance Certificate. Where the Charge is over agricultural land then the Consent of the Land Control Board is required. Where the land is situated within a municipality and land rates are payable then a Land Rates Clearance Certificate would be required to be issued by the Local Authority within which the property is located.
5. Assessment of the instrument to stamp duty and payment of the assessed stamp duty. Presently stamp duty payable is 0.1% of the lent amount.
6. Lodging of the Charge at the Lands Registry for stamping.
7. Registration of the charge at the Lands registry upon payment of a standard registration fee. The Charge is accompanied by the original document of Title to the property to be charged to enable the making of an endorsement on the said title document indicating the existence of the Charge as an encumbrance over the property.
Procedure with regards to Transfer of a Charge
the procedure to be followed in the transfer of an instrument creating a charge entails:
1. Conduct of an official search over the particulars of the title of the property to be charged so as to ascertain ownership and the nature of any other encumbrances that may exist over the property.2. Drawing up and execution of a sale agreement for the property.
3. Drawing up and execution of the Instrument of Transfer. The Transfer is executed by both the Transferor (the person who owns the property and is selling it) and the Transferee (the person purchasing the property)
4. Assessment of the instrument of Transfer to stamp duty and payment of assessed stamp duty. Assessment of a Transfer to determine the stamp duty payable to the Kenya Revenue Authority on the Transfer is done by a Government Land Valuer at the Lands Registry. Stamp duty payable on the transfer of real property is computed at either 4% for land situated within a municipality or 2% for property located outside a municipality. Both parties to the transaction require a PIN.
5. Lodging of the Instrument of Transfer at the Lands Registry for stamping.
6. Registration of the Transfer upon payment of a standard fee. When lodging the Instrument of Transfer for registration the same should be accompanied by the original documents of Title to the property.
Under the Registration of Lands Act the old Title Deed of the property is delivered up and cancelled and a new Title in the name of the new proprietor issued. In the case of the Registration of Titles Act and the Government Lands Act the existing document of title is duly endorsed with a memorandum of the transfer by the Registrar of Lands clearly indicating that the property has been transferred to the Transferee.
