CHARGES & MORTGAGES EXPLAINED

 CHARGES & MORTGAGES

Charges and mortgages are basically lending transactions. They are basically designed to provide security for money advanced by creditors.

 In the case of samtley vs. wilde, Lindley J defined a mortgage as a disposition of some interest in land or other property as a security for the payment of a debt on the discharge of some other obligation for which it is given. In simple terms a mortgage is a conveyance of land as a security for the payment a debt or the discharge of some other obligation.

Stratham defines a mortgage as follows; “a mortgage is a transaction in which a borrower transfer to a lender ownership of an interest in land, the condition of the transfer being that the ownership or interest is vested in the lender as security for the loan. The borrower is called the mortgagor and the lender is called the mortgagee, the loan is called the mortgage debts and the land, the mortgage property.

Under the ITPA, a mortgage is defined as the transfer of an interest in specific immovable property for purposes of securing interest in payment of money advanced or to be advanced by way of loan an existing or future debt on the performance of an engagement which may give rise to a pecuniary liability.

A charge on the other hand is defined under s. 3 of the RLA as an interest in land securing the payment of money or monies worth or the fulfillment of any condition (and includes sub-charge and the instruments creating the charge). This is the same definition adopted in s.2 of the land act. Under the land act, a charge includes:

a.        Informal charge

b.       Customary charge

It is important to differentiate what constitutes a mortgage and charge,

A mortgage is peculiar to land registered under Government Lands Act & Land Titles Act; A charge is peculiar to land registered under Registered Land Act & Registered Titles Act

A mortgage transfers an interest in specific immovable property for the purposes of securing the payment of money, advanced, or to be advanced by way of a loan; a charge on the other hand does not transfer any interest in the land but designates the land as security for the debts. A mortgage therefore conditionally assigns/conveys interest in land to secure the payment of a debt. The assignment or conveyance is conditional on the default by the borrower in that in the event that the borrower defaults, the mortgagee’s interest in the land becomes absolute. Where the borrower or mortgagor does not default, the land reverts to the mortgagor.

 A charge on the other hand only gives a rise to payment without aspiring transfers in the title unlike a mortgage. In other words whereas mortgage confers interest on the property, charge confers over the property

  Under s. 78 of the land act the provision of charges have a retrospective event. The land act therefore applies to charges that were created before the act came into force. Reference to charged land has the meaning of charged land, charged lease and a second or subsequent charge.

The land act at s.79  creates informal charges by way of a written and witnessed undertaking to charge in land or interest in land or by way of deposit to title of documents with the charge. This is a form of equitable charge.

Under Registered Titles Act, equitable charge is created by deposit of documents of title to land under the act evidenced by an instrument in writing. Memorandum of deposit of title is to be registered under equitable mortgages act. An equitable mortgage or charge is created when the borrower deposits with the lender the documents of title with intent to create security thereon.

Under the RLA it was controversial as to whether an equitable charge may be created under the act. It was argued on the one hand  that RLA does not provide for equitable charges as the title documents is not itself a title per se and further that the RLA provides for how to create a security. In the case of K.C.F.C vs. Ngeny the court of appeal held that s.163 of the RLA imports the common law principle of equity including equitable charges. The express provision recognizing equitable charges under the land act puts this matter to rest.

Under section79 (3) of the RLA a charge of a matrimonial home shall be valid only if any document or form used in applying for such a charge or used to grant the charge is executed by the chargor or any spouse of the chargor leaving in that matrimonial home or there is evidence from the document that it has been accented to by all such persons.

Issues:

i.                     Who qualifies as a spouse?

ii.                    What is a matrimonial home?

Under the act, matrimonial home refers to any property owned or leased by one or both spouses and occupied by the spouses as their family home.

Under s. 79(5), a normal charge shall take effect only when it is registered in a prescribed register and a charge shall not be entitled to exercise any of the remedies under that charge unless it is registered.

What are the ingredients of a charge?

Every charge instrument must contain the following:

i.                     Terms and condition of sale.

ii.                    An explanation of the consequences of default

iii.                  The reliefs of the chargor including the right of sale

Under s. 81(1) of the act, charges shall run according to the order in which they’re registered. Informal charges are also ranked according to the order in which they are made but a registered informal charge shall have priority over unregistered informal charge.

Subject to the provisions of the act, a charge may make provisions to the charge to give further credit to the chargor to a current or continuing account. This is what is called tacking.

Variation of interest rates

Under s. 84(1) of the act, where it is contractually agreed that the rate of interest is variable, the rate of interest payable under the charge shall not be increased or reduced without a written notice served on the chargor by the charge.

The chargee must give the chargor at least 30days notice of the reduction or increment. His notice must state clearly and in a manner that can be clearly understood the new rate of interest to be paid.

Covenants, conditions and powers implied in charges

Under s. 88(1) of the land act, in every charge there shall be covenants binding the chargor to:

a.        Pay the principle money on the day appointed in the charge agreement.

b.       To pay all rates, charges, taxes, rent and other outgoings that are payable in respect to the charged land.

c.        To repair and keep in repair all buildings and improvements upon the charged land and to permit the chargee and chargee’s agent to inspect the state and condition of the building.

d.       To ensure by insurance or any other means that maybe described or which are appropriate.

e.        In the case of agricultural land, to use the land in a sustainable manner.

f.         Not to lease or sub-lease the charged land or part of it for a period longer than one year without the consent of the chargee.

g.       Not to transfer, assign or lease the land or part of it without the consent of the chargee.

h.       In the case of a charge of a lease, during the continuance of the charge to pay, perform and observe the rent, covenants and conditions contained in or implied by and in the lease.

i.         If the charge is a second or subsequent charge that the chargor will pay interest from time to time accruing on the prior charge when it becomes due and will at the proper time pay the principle sum.

j.         If the chargor fails to comply with any of the covenants implied, the chargee may spend any money which is reasonable to remedy the breach and they add the money to the principle sum.

Remedies of a chargee

The remedies that obtain to a chargee under the RLA included the realization of security by way of statutory power of sell, appointment of a receiver and institution of a suit by the chargee to recover the loan amount as a civil debt.

RLA outlawed the remedies for closure and the right of possession.

Exercise right of sale

Institute a suit

Appoint a Receiver

Under the ITPA the chargee or mortgagee would be titled to exercise statutory power of sale, appoint a receiver right to for closure and the right to take possession.

Under s.90 (1) of the Land Act, if a chargor is in default of any obligation fails to pay interest or any other periodic payment or any part therefore due under any charge or in the performance or observation of any covenant, express or implied, and continues to be in default for one month, the chargee may serve on the chargor a notice in writing to pay the money owing or to perform and observe the agreement as the case may be.x

The notice is required to notify the recipient (chargor) on the following:

i.                     Nature and extent of default by the chargor

ii.                    If the default is about failure to perform or observe any covenant in the charge, the thing that the chargor must do or desist from doing so as to rectify the default and the time being not less than two months by the end of which the default must have been rectified

iii.                  If the default consists of non-payment of any money due under the charge, the amount that must be paid to rectify the default and the time being not less than 3 months by the end of which the payment in default must have been completed.

iv.                  The consequences that if the default is not rectified within the time specified in the notice the chargee will proceed to exercise any of the remedies referred to in the act.

v.                   The right of the chargor in respect of certain remedies to apply to the court for the relief against those remedies. If the chargor does not comply within two months after the debt of service of the notice then the chargee may :

a.        Sue the chargor for any money a due and owing  under the charge

b.       Appoint a receiver of the income of the charged land.

c.        Lease the charged land or if the charge is of a lease, sub-lease the land.

d.       Enter into possession of the charged land

e.        Sell the charged land.

Chargee sues for money owed if:

a.    The chargor is personally bound to pay the money.

b.    If by any course other than the wrongful act of the chargor or chargee, the security is rendered insufficient and the chargee has given the chargor sufficient time to give additional security.

c.    If the chargee is deprived of the whole or part of the security through a wrongful act or default of the chargor

Under s. 92(1) the court may order the postponement of any proceedings brought under this section until the chargee has resolved all the remedies relating to the charged land.

A chargee may exercise a power to sell the land. Before exercising the power of sale, the chargee shall serve the charger with a notice to sell which has to be in the prescribed form and shall not proceed to complete a sale until at least 45 days have elapsed from the date of service of that notice of sale.. A copy of the notice is supposed to be served among others;

i.                      the commission if the charged land is a public land;

ii.                    the holder of the land out of which the lease has been granted if the charged land is a lease;

iii.                  spouse of the chargor who had given the consent ;

iv.                  Any leasee and sub-leasee of the charged land.

v.                   Guarantor of the money advanced under the charge

Before a chargee exercises the right to sale:

i.                      A forced sale valuation has to be done.

ii.                    If the sale is to proceed by public auction, the chargee shall ensure that the sale is publicly advertised in such a manner and form as to bring it to the attention of interested buyers.

iii.                  The sale shall be made in a prescribed form and the registrar shall take it as sufficient evidence that the sale has taken place.

Courts have intervened where a statutory notice issued is not valid.

Case St. John vs. cooperative bank of Kenya; the court held that the commission to serve a valid statutory notice is a fundamental breach of statute and it delegates the chargor’s equity of redemption. If a statutory notice is not valid, the chargee’s statutory power of sale does not approve.

Conveyancing : Outline of a simple conveyancing transaction

 

Conveyancing- Outline of a simple conveyancing transaction

 

Seller’s Advocate (SA)	Buyer’s Advocate (BA)
Take instructions   At this stage- must obtain documentary proof of the client’s identity (to comply with money laundering regulations)	Take instructions   At this stage- must obtain documentary proof of the client’s identity (to comply with money laundering regulations)
Prepare Pre-contract package   This comprises of; Draft contract, showing what land the seller is selling and on what terms he is prepared to sell Evidence of the seller’s legal title to the property, to prove that he does own it Sometimes the results of the pre-contract searches which the seller has made and the other information about the property   The package may also include other information such as planning permission.
	Investigate Title   Must check that the seller is entitled to see  what he is purporting to sell If problems with the title are discovered, the buyer can withdraw as there is no binding contract as yet
	Pre-contract searches and enquiries   Necessary because of caveat emptor- buyer beware The National Land information service provides an internet ‘one-stop-shop’
	Check buyer’s finances   To ensure he is able to proceed with the transaction, including all associated costs and deposits
	Approve the draft contract   It must be then returned to SA, telling him that the buyer has approved the terms The contract is the prepared for the client’s signatures Two copies are printed, buyer signs one, seller signs the other The contract comes into existence by ‘exchange of contracts’ (i.e. the buyer received the copy signed by the seller and vice versa) Prior to physical exchange through the post, parties usually agree over the phone that the contract should come into existence at that moment. This is telephonic exchange
EXCHANGE CONTRACTS   This marks the stage where a binding contract comes into existence   On exchange, the buyer will normally pay the deposit
	Raise requisitions with the seller   These are questions or requests, usually directed at the resolution of procedural queries relation to the mechanics of completion its self. E.g. buyer needs to know how much money is required to complete, where completion is to take place and who holds the keys. Standard form is usually used here.
	Prepare transfer deed Sends to SA for approval at the same time as requisitions NB sometimes the contract will provide for SA to draft the transfer deed, which will be provided to the buyer at the same time as the draft contract The contract states what the parties have agreed to do, the transfer carries it out
Approve Transfer deed This approval is normally notified to the buyer’s solicitor at the stage when replying to requisition The transfer deed can then be engrossed- i.e. a copy is prepared containing any agreed amendments. This is the copy which will be signed by the parties
	Pre completion searches To ensure no last minute problems have occurred with the title
Prepare for completion   Take steps to ensure that completion will proceed smoothly and without delay	Prepare for completion   Make a checklist of what is to happen at completion, to ensure nothing has been overlooked
Completion
Post completion matters   Tie up loose ends Send the seller’s lender the amount required to pay off the seller’s mortgage, obtain a receipt, and send it to BS who will need this to prove to land registry that the mortgage has been discharged Account to his client for the proceeds of sale and submit bill of costs (if not already done). The proceeds of sale should be dealt with asap, or the SS may have to pay interest on them	Post completion matters   Deal with payment of stamp duty land tax, usually paid within 30 days of completion Particulars of the transaction must be delivered to HMRC after completion, a certificate is then issued which allows registration of the transaction at the Land Registry. Without registration the buyer will not acquire legal ownership to the property After these formalities, BS must apply to Land Registry for is client’s title to be registered. Land registry will provide a Title info Document, which should be kept either with the buyer, lender or BS

 

CONVEYANCING LAW/PROPRIETARY RIGHTS AND TRANSACTIONS

TOPIC 1

WHAT IS CONVEYANCING?

It is generally understood as the transfer of estates and interest in land by a legal process.

Abbey Robert and Richard mark consider conveyancing as the process by which legal title to property is transferred.

According to Black’s law dictionary, conveyancing is the art of business of drafting and preparing legal instruments especially those that transfer an interest on real property.

There are two parties to the transaction, the transferor and the transferee.

According to prof. Philip Kenney & Russell Hewitson, in their book “conveyancing in practice” they say conveyancing is concerned with the legal mechanism whereby the ownership of land or of an interest in land is transferred from one person to another.

Conveyancing can be referred to as the “how” of the law.

Conveyancing relates to land or an interest to land only.

Who is a conveyancer?

The main work of a conveyancer is to draft, construct documents, and then utilize the instruments for creating and transferring instruments in land and ensure the person has a marketable title.

Investigate titles, make enquiries and searches, confirm completion of the transaction

Read on the concept of Ownership, possession and title

Sources of law on proprietary transactions

REGISTRATION OF LAND & REGISTRATION OF TITLES ACT

This was enacted together with the crown land ordinance of 1915. It setup registries in Nairobi, Mombasa and Malindi. The land registries were setup to facilitate registration of documents relating to transactions involving alienated crown land. This was the first registration statute In Kenya. All the documents registered under this statute related to land which was the subject of either 999 years agricultural land leases which had been converted into freeholds by the commissioner pursuant to the 1915 crown land ordinance. It was applicable only to un-adjudicated claims at the coast. Most parts of the registers maintained under it have been converted to RLA and RTA .

THE LAND TITLES ACT CAP 283

It was enacted in 1908 for the purposes of alienation of crown lands at the coast. The reason why it was enacted was to enable the colonial govt to distinguish between colonial land and crown land situated within the 10 mile coastal strip. The individuals who successfully claimed private land were issued with certificates of ownership giving them freeholds titles or certificates of mortgage or interest covering leaseholds depending on the nature of title adjudicated. It is worth noting that the titles issued under the LTA did not create new rights, they only conferred the existing rights.

Any land which was not successfully claimed by private individuals was vested in the colonial government and after independence in the Kenyan government

THE REGISTRATION OF TITLES ACT CAP 282 LOK

This was enacted in 1920. All successfully…were registered under it. To date all titles are indicated in 1920 and thereafter are registered under this act. The RTA was enacted principally for the purpose of improving issuance of titles to land as well as regulating transactions in land.

It introduced conveyancing by statutory forms.

This act deals with all land granted by government or subject to the certificates of ownership, mortgage, or interest issued by the registrar of titles under the LTA. It also applies to all leaseholds which have been converted from the 99yrs term or 999yrs term since 1920 to freeholds or to any titles converted on a voluntary basis from government lands act or LTA registration to RTA titles.

THE INDIAN TRANSFER OF PROPERTY ACT 1882

The land titles act, the registration of documents ordinance , RTA were basically registration statutes and they only provided for the registration of ascertained interest in land but not the manner of dealing or transacting in the said interest.

When they were enacted, there was no substantive law governing the conduct of proprietary transaction or conveyancing.

The concept of titles at that time in Kenya was still new.

Because of this, the govt resorted to articles 11b of the 1897 East African ordained council which allow the application of the 1882 Indian transfer of property act in Kenya.

The act provided for the lacuna/gap[1] in Kenya to deal with conveyancing in Kenya. The ITPA still remains the substantive law as relating to land concluded under the LTA and GLA. The main shortcoming of the ITPA was that it was neither conveyancing nor a registration statute.

The RLA was thereafter enacted to act as the substantive conveyancing and registration statute

Government land act

It was granted in 1915 to make better on further provision; to regulate leasing.

Under this act the president was granted powers to sign a document granting title. The president could relegate his power to the commissioner of the land.

It abolished the compulsory requirement under the registration of documents action respect to transaction relating to alienated government land. This statute governed all leasehold and freehold interest granted by the government prior 1920 but to the exception to leaseholds converted to 99years of freeholds under RTA

Registered Land Act  CAP 300

Enacted in 1963 and it was enacted to achieve two main objectives;

1. To facilitate registration of all land owned by Africans under the law.

2. To simplify and unify the registration process which at the time was spread over several registration statutes.

The RLA therefore provided among other things for the conversion of a registration under any of the other statutes into registration under its provisions.

It was enacted because of the problem that was under the GLA, LTA, and ITPA. The problem it’s only limited only to the registration of title to land.

They did not provide for the procedure through which interests in land registered under them would be conveyed.

LAND CONTROL ACT CAP 302

It was enacted in 1963 with the aim of regulating by means of public control the manner in which the land owner of interest in land is supposed to deal with it. It owns its origin to the land control ordinance of 1944. This is the ordinance that saw or put to an end to the exclusive Europeans dealing in land as was given envisaged under the crown lands ordinance of 1902 & 1915. It ensured that only those who had capacity to develop land owned it.

The land tenure committee had recommended that any system of land tenure would be unsatisfactorily if it permitted and restricted use and misuse of land. The 1944 ordinance came up with a land control board. Consent of the land control board had to be obtained before any transaction was seen as valid. The land control board was given powers to impose conditions as to the development of land and failure to comply with the conditions would lead to forfeiture of land. The board was composed of DC as...

All transactions in land were to be controlled apart from transmissions of land unless it involved subdivision of the land foreclosures and transactions made in favor of the government or trust board.

It is under this act that the land regime in Kenya is based. (The land control act)

Statutes

-Sectional properties act no. 12 of1987

- Physical planning act

-The local government act.

- The stamp duty act

- The landlord and tenants (shops, hotels & catering establishments) act

- Companies act

- Rent restrictions act

- Auctioneers act

- The law of contract act

- The land disputes tribunal act

- Distress for rent act

NEW LAND LAWS

- National land cohesion act among others

Article 60[2] (Of the Kenyan constitution) sets out the principle of land policy that are supposed to guide the use and management of land such as equitable access to land, security to land rights, transparent and cost effective administration of land, encouragement of.....see below

Article 60(2) provides these principles shall be implemented through a national land policy developed and reviewed regularly by the national government and through legislation.

Article 68 of the constitution provides as follows:

Parliament shall:

A. Revise, consolidate and rationalize existing land laws;

B. Revise sectorial land use laws in accordance with the principles set out in article 60(1)

- The land act of 2012

The preamble says....talks about article 68 of the constitution.

Land law; Repeals Wayleaves act, also repeals the land acquisition act cap 285

Section 3 of the land act provides that 3. (1) This Act shall apply to all land declared as—

(a) Public land under Article 62 of the Constitution;

(b) Private land under Article 64 of the Constitution; and

(c) Community land under Article 63 of the Constitution and any other written law relating to community land.

Section 5 of the act provided for the various classifications of land tenure in Kenya.

Section 7 provides for various methods of acquisition of land.

The land registration act of 2012

Preamble sets out......

It is modeled in the registration provisions of the registered land registration act.

Section 3 &5 provide that this is the registration law applicable to all private and community land.

It repeals the following statutes;

Indian transfer of property act 1882

The government land act

Registered titles act

The land titles act

Registered land act

TOPIC 2

There are two types of conveyancing:

1.      Registered conveyancing – arises where the land or interest in land has been registered. The title in land or interest in land is proved by an entry in the official register. Ordinarily the entry in the official register is considered to be conclusive proof of title.

2.      Unregistered conveyancing – arises where the land in question or interest in land are not registered. Title to land in unregistered conveyancing is usually proved by tracing through the title deeds disposing off the property or interest in land. It is necessary for one to establish the root of the title. And the documents should not be taken as conclusive proof for the title

Formalities in the disposition of land

Disposition in land are usually conducted in two phases:

·         Phase one involves contract of sale of land

·         Phase two involves completion of land (Commonly referred to as the conveyancing stage). Stage at which the transfer of the interest in land is affected.

Contract for sale of land.

Just like any other contract. However, there are other prerequisites:

a.       There must be an offer.

b.      There must be acceptance of the offer.

c.       There must be consideration

d.      The parties must have the intention to create a legal relationship.

e.       The parties must have contractual capacity.

Contract of sale of land is subject to certain stringent provisions. It is not like any other contract, say for instance for sale of chattels. Unlike other contracts of sale, a contract for sale of land must be in writing.

Reason:

Check…s.3 ss.3 of contract act…states that a disposition of a memorandum in land must be in writing. Prior 2003, a party to reinforce an agreement sale based on part performance, the courts will consider an unwritten sell agreements based on then are…

In 2003, an amendment was then made in the act which stated as follows; that no suit shall be brought upon a contract for the disposition of an interest in land unless:

a.       The contract upon which the suit is based:

                                                              i.      Is in writing

                                                            ii.      Is signed by all the parties thereto

b.      The signature of each party signing has been attested by a witness who is present when the contract was signed by such a party.

There’s an exception to this section: does not apply to a contract made in the course of a public auction where a resulting trust is created or a constructive trust.

In a nutshell, the Requirement for writing under this amendment is therefore absolute.

Assignment

A contract for sale of land must therefore contain the following:

1.      The identity of the parties (names of the person, id no. , post office, seller or buyer).

2.      The transaction.

3.      Identity of the property (land parcel number, size of land).

4.      The price of the property (consideration).

5.      Other terms and conditions of the transaction. (rates outstanding (who pays the rest), payment in hire purchase)

6.      Respective signature must be appended by both parties to the contract. their signatures must be attested to by the person present by the excursion of the others)

Remedies

1.      Rescission  - during fraud, breach,

2.      Specific performance – one must have performed his part so as to be able to rely on this remedy

3.      Claim damages

Completion of the contract/ conveyancing stage

This is done after all the parties have performed their part. The conveyancing process involves the following:

a.       Investigation of the title – (carry out a search/ groundwork

b.      Searches to establish the legal ownership of land and to find out if there are any encumbrances

c.       Preparation of conveyancing documents approving and engrossing.

d.      Execution , attestation and verification

e.       Registration of the documents to transfer either ownership or security or even discharge …

In any sale of land contracts …

n/b - Look at LSK and judicial conditions of sale

TOPIC 3

IDENTIFICATION OF CONVEYANCING DOCUMENTS

It is therefore important to know what documents you are dealing with and the particular statute.

Execution and attestation

Execution can be said to be the making of an impute by the person entitled to an interest in land or a conveyance.

One of the ways of execution is the signing of an agreement. In printing can be done by way of signature or stamping.

Where a company is involved, a company seal will be affixed and attested to by either two directors of the company or a director and a company secretary.

For other bodies like societies, trust bodies or organizations, you need to ascertain from the constitution, the person in authority to sign.

For govt bodies or parastatal you look at the act establishing the parastatal or organization as to who has powers to sign.

s. 44 of the land registration act provides that every instrument effecting any disposition in land under the act shall be executed by each of the parties consenting to it.

For a corporate body, association, corporative society or any other organization, the execution of any instrument shall be effected in the presence of either an advocate of the high court of Kenya, magistrate, a judge or notary public.

If an instrument is executed outside Kenya, the instrument shall not be registered unless it has endorsed on it or attached to it a certificate in the prescribed form:

a.       If the instrument is executed within the commonwealth then by a judge, magistrate a notary public or commissioner for oaths.

b.      If the instrument is executed in a foreign country outside the commonwealth then by any other person or class of persons as the cabinet secretary may prescribe.

Where you are effecting a transfer in addition to execution and attestation you must attach the following instruments:

i.                    A copy of ID or a passport.

ii.                  A copy of PIN certificate.

iii.                Passport size photographs.

iv.                Where applicable marriage certificate

v.                  Such other identification documents as the cabinet secretary may prescribe.

Under s. 45 of the LRA a person executing an instrument shall do the following:

a.       Appear before the registrar, public officer or other person as is prescribed.

b.      Be accompanied by a credible witness for purposes of establishing identity unless the person is not the registrar, the public officer or other person.

The registrar, public officer or other person shall identify the person and ascertain whether the person freely and voluntarily executed the instrument and shall complete a certification to that effect.

There are cases where the registrar can dispense with verification. This is where the registrar considers that the verification cannot be obtained without difficulty or is satisfied that the document has been properly executed.

If the registrar conforms that the document has been properly executed, registrar will record on the document, the reasons for dispensing the appearance of the parties.

N/B verification is a requirement of the LRA 2012. UNDER S. 45.

TOPIC 4

POWER OF ATTORNEY.

This is an instrument by which a person appoints another to act for him in any matter including dispositions of interest in land. It may be general or specific. The person appointing is known as the principal or the donor. The person appointed is known as a donee. The person granting the power of attorney must have capacity to do so.

See the case of grace wanjiru munyinyi 7 OTHER V Gideon waweru & others.

Under s. 48 of the LRA no instrument executed by any person shall be accepted by the registrar unless the person executing it was authorized in that behalf by a power of attorney executed and verified in accordance with s. 45 of the act.

The original power of attorney or a certified copy thereof shall be filed. There are circumstances where a document can be registered without the power of attorney.

These include under s. 48 (3) where there is a guardian of a person under legal capacity or a person appointed under some law.

But before the registrar can accept some documents executed by a guardian or a person appointed to represent under legal capacity, the registrar must be satisfied that the person claiming to be a guardian is entitled to execute the document and secondly require the production of the appointing instrument of the person and shall file a notice of explanation to that effect.

The power of attorney must be in the prescribed form and failure to comply renders the power of attorney unenforceable. See case of May-fair holdings ltd v Ahmed

N/B power of attorney can be revoked by the donor any time. The donor must issue a notice in the prescribed form to the registrar.

PREPARE:

Power of attorney

Revocation of that power of attorney.

TOPIC 5

Registration

It can be defined as the process of recording interest in land so as to facilitate the ascertainment of these interests through searches for effective conveyancing. Once registration is done, an interest in land is transferred from one person to another. There are several goals of registration.

A good registration system will aim at the following:

a.       Achieving security of tenure. It gives one a right to indemnity from the govt. This is the security that a transferee, mortgagee enjoys. It flows from the fact that a purchaser of land from proprietor on the register should have commercial evidence in the transaction and bothered by the beneficence of title not revealed in the register. The government guarantees security of tenure under s. 23 ss. 1 of the RTA and s. 24 ss. 1. Of the RTA.

S. 24, 25 and 26 of the LRA also gives security of tenure by way of guarantee and indemnity.

Security of tenure is also guarantee by the conclusiveness of the register.

No claim which is inconsistent with the register can be conveyed against the interest…

 A person who has acquired title from a registered proprietor acquires an indivisible title against the whole world.

b.      Reduction of litigation

It is achieved through registration in the sense that the size and the owner of the land are determined.

The reduction in litigation is one of the reasons as to why a good registration system must have survey as an indispensable prerequisite.

Once registration has taken place, one may transact or settle on his land without fear of being sued.

c.       Prevention of fragmentation of land. One needs the consent of the land control board in the case of agricultural land before a subdivision is carried out. The land control board can refuse consent on the ground that the subdivision will lead to unnecessary fragmentation. In urban areas one needs the permission of the planning, development and user committee. Registration will not be done without the permission of the committee.

d.      Facilitation of tax legislation. Registration enables the government to identify a person against whom to levy a tax or a rent regarding a parcel of land. Since the land transaction must be registered, the government is able to follow up a sale of land and tax it. Local authorities are also able to get revenue from trust land.

e.       Administration of loan system. Security of title makes banks able to advance money to the proprietors. Once one is registered as a proprietor it is easy for the person to get money using the title as security.

8^th June 8, 2015

THERE are two types registration:

i.                    Deed system

ii.                  Title system

The LTA, RTA (use title system) GLA (deed system)

Registration of deed system.

Under the registration of the deed a public register is kept in which documents affecting interest in land are copied or abstracted. It is the document or the deed that is registered and not the title. In this system, it is the document that proves title and not the register as is opposed to registration of title.

A person relies on this kind of register is supposed to inquire into the history of all transactions affecting the particular parcel of land.

Before any transaction is concluded, it is necessary to establish the good root of title. This will involve the tracing of proprietors backwards to the original land.

In this kind of transaction the govt does not give indemnity. Dealings in land registered under this system can be very expensive in terms of time and resources

REGISTRATION OF TITLE

Under this system of registration a register of titles serves as the authoritative record of the rights to clearly defined units of land as vested for the time being in some particular person or body and of the limitations if any to which these rights are subject.

When the property is registered to the register, all that the land registrar has to do is to check the details of the property. Once the registrar is satisfied that the title is in order then the current legal owners are entered into the register as the registered proprietors.

The registrable transactions are registered against the title document kept in the registry and a memorandum thereof is endorsed on the register and on the grant or certificate issued to the proprietor.

Apart from the overriding interests, all particulars affecting the title of land are clearly evidenced by merely a perusal of the register that is kept.

The register serves as the final authority and the state accepts the responsibility of the entries entered in the register.

In the deed system there is no govt indemnity unlike in the title system.

Certificates are issued after registration for absolute propietorship and leases for leaseholds

Registration under this system is effected pursuant to three fundamental principles of the Australian Torres system.

The principles are:

1.      The mirror principle. The register is intended to operate as a mirror reflecting accurately the estates and interests affecting registered land.

2.      The curtains principle. The register is supposed to be the source of all information regarding title. (finality principle of the title.)

3.      Insurance principle. Under this principle, any person who suffers loss under the register should be put in the same position under indemnity as if the register was correct. It reflects the principle of indemnity by the government.

The law relating to registration of documents and titles.

There are different laws that regulate reg. of deeds and docs.

REGISTRATION UNDER THE RDA[3]

It is a record of isolated transactions. The record is evidence that a transaction has occurred but is not in itself proof of the transactions’ validity or legality.

s. 4 of the act states the documents that must be registered. It is compulsory that any documents conferring or purporting to confer declare limit or extinguish any title, right or interest in or over immovable property must be registered.

There are certain documents like transfer of debentures, leases and licenses to land for terms not exceeding one year and documents which are registrable under GLA, RTA and RLA may not be registered.

Under s. 5 of the act, there are certain documents that are registrable at the option of the person holding them.

These includes deed polls, wills and plans.

Under s. 9 all registrable documents must be registered within two months, failure to do so attracts penalty.

Under s. 16 , the registrar can cancel a registration if it was obtained by fraud.

Under s. 18 of the act , a document that is compulsorily registrable and is not duly registered cannot be used as evidence in court without leave of the court.

REGISTRATION UNDER GLA

Under s. 99 of the act, all documents conferring or purporting to confer, limit or extinguish any rights, title or interest in land governed by the act must be registered.

Under s. 100 of the act, where a document is not registered, it cannot be tendered in evidence.

Under section101 of the act, any document that is executed creating a signing, limiting or extinguishing any right, title or interest to in or over land registered under the act is void if it is not registered.

REGISTRATION UNDR THE LTA

Under s. 57 of the act all documents affecting the holding or interest in the holding of land must be registered

Registration is done by making of entries in the register kept pursuant to the provisions of the act.

Under s. 58 of the act, every document which is not registered shall be deemed void as against all parties claiming adverse interest there to by virtue of any subsequent but duly registered document.

There are exceptions to these requirements under s. 58 (1).

The following documents need not be registered under the act:

i.                    Composition deeds

ii.                  Documents relating to shares in a joint company.

iii.                Debentures given by such companies capable of only creating a floating charge over the companies removable assets

iv.                Endorsements upon transfer of such debentures

v.                  Leases for one year or  less than that period

Under s. 59, no charge or mortgage can be created except by way of a registered document.

…

REGISTRATION UNDER THE RTA

Titles are normally …which are issued to proprietor.

Under s. 32 of the act, any instrument unless registered shall not pass title in land.

UNDER s. 23 of the same act certificate of title issued by the registrar to a purchaser of land shall be taken as conclusive evidence by the person…proprietor is the absolute and indefeasible owner. Such owner is only subject to the encumbrances, easements, restrictions and conditions obtained in the title. 

s. 40 and 41 of the act provides that all leases for periods exceeding 12 months or for less than 12 months but containing a right to purchase the reversion must be effected by a registered instrument. Similarly a charge must be created by a registered instrument.

REGISTRATION UNDER RLA.

Under RLA, you’ll find a land register. The register is divided into three sections:

i.                    The property section

ii.                  The proprietorship section

iii.                The encumbrances section.

Under s. 38 (1) of the act, no land, lease, or a charge shall be capable of being disposed of except in accordance of provisions of the act. Any attempt to dispose of any land, lease, charge or otherwise than in accordance with the act shall be void in creating, extinguishing, varying or affect enemies, estates, rights or interest in land, lease or charge

s. 38 (2) provides that nothing in s. 38 (1) shall be construed as preventing any unregistered instrument from operating as a contract. An instrument although unregistered, may still operate as an effective contract inter-parties.

Under s. 65 a charge must be completed by registration as an encumbrance and the registration of the person in whose favor is created by filing the instrument.

Under s. 47 leases for periods over 2 years must be registered

Periodic tenancies are not registrable under the act.

Documents must be registered within three months. (Failure to do so attracts a Penalty).

Under s. 27 (a) once a person is registered as a proprietor in land, the person is vested in that person as the owner with all rights and privileges related thereto.

Similarly under s. 27 (b) the registration of person a proprietor or a lease shall vest in that person leasehold interest described in the lease together with all implied and expressed rights and privileges appurtenant thereto.

Under s. 28 of the act the rights of a proprietor whether acquired on a first registration or acquired subsequently for valuable consideration or by an order of the court shall not be liable to be defeated except as provided in the act.

Under s. 30 unless the contrary is expressed, all registered land shall be subject to overriding interest.

Under s. 31 every proprietor acquiring land, lease or a charge shall be deemed to have had notice of entry on the register relating to the land, lease or charge subsisting at the time of acquisition.

REGISTRATION UNDER THE LRA

It is found at s. 24 of the act. Under that section the registration of a person as a proprietor in land vests in that person the absolute ownership of the land together with all the rights and privileges belonging or appurtenant thereto.

In the same vein the registration of a person as a proprietor of a lease shall vest in that person, the leasehold interest described in the lease together with all implied and expressed rights and privileges belonging or appurtenant thereto subject to all implied or expressed agreements, liabilities or incidents of the lease.

s. 25 of the act provides for the rights of a proprietor. Under that section, the rights of a proprietor whether acquired on first registration or subsequently for valuable consideration or by an order of the court cannot be defeated unless as provided for under the act and shall be held by the proprietor together with al privileges and appurtenant belonging thereto free from all other interests and claims but subject to the following:

a.       the leases, charges and other encumbrances, provisions and restrictions

b.      Such liability, rights and interests as affect the same and declared by s. 28 not to require noting on the register.

Under s. 26 of the act, the certificate of title issued by the registrar upon registration or to a purchaser of land upon transfer or a transmission by the proprietor shall be taken by the courts as prima facie evidence that the person  who owns the land is the absolute and indefeasible owner subject only to the encumbrances, easements restrictions and conditions contained or endorsed in the certificate cannot be challenged except for:

a.       Fraud , misrepresentation to which a person is a party

b.      Where a certificate of the title has been acquired illegally & procedurally or through a corrupt scheme.

THE SECTORAL PROPERTIES ACT (CAP 2 OF 1987)

The objective is spelt out in the preamble of the act. It is an act of parliament to provide for the division of building into units to be owned by individual proprietors and common property to be owned by the proprietor of the units as tenants in common and to provide for the use and management of the unit and common property and for connected purposes

The act only applies to land held on freehold title, or on a leasehold title where there is an expired residue of the term of not less than 45 years.

s. 4 of the act provides for registration of sectional land, and that sectional land cannot be registered unless it describes two or more units and is presented for registration in quadruplicate.

On the registration of the sectional land the registrar closes the parcel of the land and then opens a new separate register for each unit described in the sectional land.

A title deed is then issued for each unit. The title to the unit is deemed as issued under the RLA. Once a register for a unit is open, the unit may devolve or be transferred leased, charged or otherwise dealt with in the same manner and form as land held under the RLA.

In the register the registrar must include the share of the common area apportioned to each unit.

The common property is held by the owner of the units as tenants in common will share proportional to their units. One cannot deal with the section of the common property separate from the unit.

THE LEGAL EFFECT OF REGISTRATION AND THE EFFECT OF FAILURE TO REGISTER.

The effect of registration is to vest in the person the rights envisaged in the contract between the parties.

…becomes registered in the rights of ownership. The same applies to transactions involving charges, leases and mortgages.

Challenges of ownership do arise in respect of customary….trusts and overriding interests.

Different statutes have different standards of registration.

The consequences of failing to register registrable instruments vary from act to act.

Some statutes provide that failure to register renders the transaction void while others provide that failure to register renders the document inadmissible in evidence.

A lot of difficulty arises when you’re dealing with registrable and un-registrable interests.  This is so because the later must also be recognized although they are not recognized.

The other challenge arises when you are dealing with customary law holdings.

The problem is more when it comes to leases, there could be a lease that is not registered but one party is already in occupation and is performing its part.

Part performance

Customary law – Obiero case

TOPIC 6

Construction of documents

The essence of interpretation is to attempt to discern the intention of the parties.

How do you interpret documents?

Documents are interpreted following the general principles of the construction of documents.

There are three general principles:

i.                    The golden rule

ii.                  Ejusdem generis rule

iii.                Falsa demonstration and non-facet rule

THE GOLDEN RULE

It Prescribes that words must be given their ordinary and natural meaning. The words are given their natural and grammatical meaning unless this would result in some absurdity or repugnance or inconsistency with the rest of the documents.

Apart from their natural meaning the words must be interpreted within their context in relation to the document as a whole and regard must be given to the background circumstances

Extrinsic evidence may also be taken into account including past negotiations

EJUSDEM GENERIS RULE

This rule applies where there is a list of things referred to in general and would thus apply to things of the same kind. For example, a reference to digging, ploughing, planting or doing any other thing to the land.

The words any other thing should be construed by reference to the specific words before it and should encompass activities related to digging, ploughing or planting. Therefore weeding should be covered by the words “any other thing”

The FALSA DEMONTRATION AND NON-FACET

This rule provides that a false description should not vitiate the conveyancing. For instance a false description of the title number if it is clear the parcel number being referred to. E.g. the title is 17ha and you’re buying 10 ha, can you write 10ha?

Parole evidence rule

S. 99-105 of the evidence provides that no evidence of an oral agreement or statement shall be admitted in order to contradict, vary, add, or subtract from the terms of the written agreement. This is the general rule as to parole evidence although parole evidence will cover all instances where extrinsic evidence is introduced in order to interpret a written document.

TOPIC 7

ROLE OF ADVOCATES IN LAND DISPOSITION

They play a key role in the land transactions. They have the responsibility of ensuring that land disposition are transacted in accordance with the law and to ensure that the rights being transacted are properly transferred to the beneficiary there are two aspects of the role of advocates in land transactions that are important:

i.                    Professional undertakings

ii.                  Conflicts of interest

PROFFESIONAL UNDERTAKINGS

A professional undertaking is a promise by an advocate of the performance of his client’s obligations. The advocate in a professional undertaking promises the other party to the transaction that the obligations to be performed by his clients will be performed and if not the advocate will be responsible for the same. That is why it is called an undertaking as the advocate undertakes that the obligation will be performed by his client and if not then that advocate is ready to take the responsibility of performance. An undertaking is made in writing although it can also be oral. It is a sort of insurance against financial loss to the other party. If an advocate gives an undertaking, then it is binding on him and he must perform the same.

An advocate as a profession does not have any duty to give a professional undertaking. It is his personal decision to do so. However, in most instances and indeed a prudent advocate will only give an undertaking if he is certain of the performance of the obligation by his client. Therefore if an advocate acts for a purchaser, he may give an undertaking to the vendor or his advocate that the purchase price will be paid on the happening of an event or by a certain date.

It is only prudent that such an advocate gives an undertaking if he has the facts already deposited in his account by the client. An advocate acting for a seller may also give an undertaking that he will deliver the documents of title and the transfer forms.

It is prudent that such undertaking is given when the advocate has at hand the documents of title. Once an undertaking is given, it cannot be withdrawn unless by agreement of the parties.

Case: peter Nga’ang’a Mwiruri v credit bank & Charles ayako nyachae t/a Nyachae & co. advocates.

Kenya reinsurance cooperation v Muguku Muriu t/a Muguku Muriu & co. advocates

An undertaking is a key to a contract and only the recipient of the sale can sue on it. The definition of an undertaking has been described from the guide to the professional conduct  of solicitors, 7^th edition of 1976 as follows; an undertaking is any unequivocal declaration of intention addressed to someone who reasonably places reliance on it and made by the:

a.        Solicitor or a member of the solicitor staff in the course of practice.

b.      A solicitor as the solicitor but not in the course of practice.

An undertaking is personally binding in the solicitor and it may be given orally or in writing and need not necessarily include the word undertake.

There is no obligation on a solicitor to either giver or accept an undertaking. Although there is a duty to act in a client’s interest, this does not imply a duty to assume or underwrite a client’s financial or other obligations.

V  adana & co advocates KLR 1963

N Paul Radier v. David Njogu Gachanja T/A D. Njogu & co. advoctaes.

Oraro & co. adocates v. s m kiibuga HC CC ‘03

JAMES Murimi Githinji T/A GITHINJI KIMAMO & CO. ADVOCATES V. JOHN NGURE MBUGUA T/A Ngure & CO. ADVOCATES NAIROBI STOCK CASE NO. 588 OF 2006

FACTS: mbugua – purchaser, ngure – vendor. Left a balance of 2.7 b

22^nd June 22, 2015

An advocate undertaking a conveyance has the following obligations:

i.                    Correspondence – an advocate must carry out correspondences to enable him gather as much information on the conveyance as possible.

ii.                  When acting for the seller or vendor, you must obtain the following information:

a.       Full names and addresses of the parties; the buyer’s advocate if any and those of their agents if any

b.      Full particulars of the property being conveyed

c.       The purchase price

d.      Whether a deposit is being paid or has been paid.

e.       Details of any encumbrances on the property

f.       Whether the property is vacant.

g.      Expected date of completion

h.      Prepare the sale agreement

i.        Prepare title documents

j.        Approve the transfer or the conveyance

k.      Attest the execution of the transfer of the conveyance

l.        Receive and account for the proceeds of sale to the client.

When acting for the buyer such an advocate will require similar information but he must advise the client on the following:

i.                    Advised on Finances.

ii.                  Other possible future liability for taxes.

iii.                Legal costs and expenses of conveyance

iv.                Carry out a search

v.                  Scrutinize the documents

vi.                Approve the sale agreement.

vii.              Prepare transfer for the conveyance.

viii.            Stamp and lodge documents for registration.

ix.                Obtain and pay purchase price to the vendor’s advocates

When acting for both parties an advocate must refrain from acting for both where there is conflict of interest or there is likely to be conflict of interest.

Other duties will include to; obtain a rates clearance certificate, to obtain a land rents certificate, to obtain consent of commissioner for land, to obtain land control board consent, to obtain count clerks consent; to obtain consent of trustees, to obtain consent of public corporation authority, obtain a discharge of a re-conveyance, pay stamp duty.

DISPOSITION OF LAND BY TRANSMISSION

Transmission basically means the passing of land, lease or charge from one person to another by operation of the law.

Transmission is a unique type of conveyancing because the proprietor of the land is not able to do that transfer himself. WHY? The proprietor is normally dead, insolvent or bankrupt

TRANSMISSSION UPON DEATH OF THE PROPRIETOR

Under the LTA the GLA and the RTA, when the proprietor of land dies, the administrators of his estate are registered as proprietors against the title with the probate or letters of administration. When the proprietor dies, the personal representatives or the administrator to the estate of the deceased will make an application to the registrar. He will be required to produce the letters of probate or administration. When the registrar is satisfied, he will be registered as such and can then gain the land. Prior to this, he cannot deal in land. The same applies where there is a charge or a lease. Under the RLA a transmission does not take effect by registering against the title the probate or letters of administration produced by the deceased personal representative. Instead the executor or administrator who wishes his name to be registered must complete prescribed forms and present them for registration like any registrable documents. Where the land is an agricultural land, the land control board consent is not required unless it will lead to requisition of the land. This same prevail under the land registration act.

Under s. 60 of the act LRA  where there are joint tenants of any land or lease or a charge if one of them dies, the registrar shall upon proof of death , delete the name of the deceased tenant form the register by registering the death certificate. U

Under s.61 (1) if it is a case of a sole proprietor or where a proprietor in common dies, the proprietor’s personal representative shall apply to the registrar in the prescribed form and on production to the registrar of the grant shall be registered by transmission as proprietor in place of the deceased with the addition after the representative’s name of the words “as executor of the will of deceased” or “as administrator of the will of the deceased.”

Under s. 62(1) the personal representative shall hold the land, lease or charge subject to any liabilities, rights interests that are unregistered but enforceable and subject to which the deceased proprietor held the land, lease or charge.

TRANSMISSION ON BANKRUPTCY

UNDER S. 63 SS. 1 of the act, once an order of court adjudging a proprietor of land as bankrupt or directing that the estate of a deceased person be administered according to law of bankruptcy is produced to the registrar then a copy of the order shall be filed. The trustee in bankruptcy shall then be registered as the proprietor of any land lease or charge of which the bankrupt is proprietor.

In other cases, under s. 65 where a person has been entitled to land, lease or a charge under any law or by virtue of any order or certificate of sale made or issued under any law the registrar shall on the application of an interested party supported by instruments of transfer or such evidence as the registrar may require register the person entitled as proprietor.

TOPIC 8

Leases and tenancies

Leases are said to be interests conferring a right to the land itself as opposed to interest conferring a right enforceable against the land of another person. The latter includes mortgages, churches, easements, profits, licenses and restrictive covenants.

A lease can also be defined as a document creating an interest in land for a fixed period or certain duration usually in consideration of payment of rent. In the case of prudential assurance co. ltd. V. London residuary body, Lord Templeman defined a lease as a contract for the exclusive possession and profit of land for some determinant time.

In the case of national couriers ltd. V. panalkina ltd. It was held that a lease is an executory contract where rights and obligations outstanding between the parties during the course of the lease. A lease creates for a term of years, a leasehold relationship between a landlord or a leaser or lessor or a tenant or a leasee

s.3 of the RLA defines a lease as the grant with or without consideration by the proprietor of the land of the right to exclusive possession of his land and includes the right so granted and the instrument ranking it and also includes a sublease but does not include an agreement of lease

s. 105 of the ITPA defines a lease of immovable property as a transfer of a right to enjoy such property made for a certain time express or implied or in perpetuity in consideration of a price paid or promised or of money, a share of crops, service or anything of value to be rendered periodically or n specified occasions to the transferor by the transferee who accepts the transfer on such terms.

The grantor of the lease is known as the lessor or landlord and the grantee is known as the leasee or tenant. Under the LRA a lease is defined to mean:

a)      A lease or sublease whether registered or unregistered of land

b)      A short term lease or agreement to lease.

Essentials of a lease

Going by the above definition of a lease, it is clear that a lease is not created unless there are the following things:

i.                    Exclusive possession

ii.                  Determinant term

iii.                Defined premises

EXCLUSIVE POSSESION

In a lease, a tenant acquires the right of possession exclusive of the landlord and all other people claiming through the landlord. In the case of street v. mount ford it was held that in determining whether a tenancy has been granted the main question is whether there has been a grant of a right to exclusive possession of the premises.

Exclusive possession is just but one element of a lease and therefore it does not follow that if you are given the right of exclusive possession you are a tenant

See the case of coffee estates v. ujagaa singh

DETERMINENT TERM

The period of the lease must be defined or capable of being defined. It must be specified and when it terminates. In the case of HARVEY V. part it was held that it is necessary that these requirements are fulfilled before the lease takes effect even if they are not agreed upon when the lease is executed.

Where the date of commencement and the date of termination are not specified the transaction is rendered void.

DEFINED PREMISES

 A lease cannot be created if the premises are not defined or are capable of being defined

In the case of heptulla brother ltd. V. jambha jeshanghai thakore the court held that a tenancy could not be created where the premises intended to be let could not be ascertained with sufficient precision.

Under s. 66 of the land act which is a replica of s. 65 of the RLA provides that subject to the provisions of the act, the owner of private land may:

a.       Lease that land or part of it to any person for a definite period or for the life of the lessor or of the leasee or for a period which though indefinite may be terminated by the leaser or the leasee.

b.      Subject the lease to any condition that may be required by the act or any other law that the lessor may impose.

s. 57 of the land act creates periodic leases. Under s. 57(1):

a)  If the term of the lease is not specified and no provision is made for the giving of notice to terminate the tenancy, the lease shall be deemed to be periodic tenancy

b)  if the term is from week to week or month to month year-year or any other periodic basis to which the rent is payable in relation to agricultural land, the periodic lease shall be for 6 months.

c) If the leasee remains in possession of the land with consent of the lessor after the term of the lease has expired then:

a.       Unless the lessor and the leasee have agreed impliedly that the continuing in possession shall be for some other period the lease shall be deemed to be a periodic tenancy

b.      All the terms and condition of the lease are consistent with the provisions of sub-paragraph one shall continue in force until the lease is terminated in accordance to that section. If the owner of land permits the exclusive occupation of land or any part of it by any person at a rent without any agreement in writing, that occupation shall be deemed to constitute a periodic tenancy.

A periodic tenancy may be terminated by other party giving notice to the other the length of which shall be not less than the period of tenancy and shall expire on one of the days on which rent is payable.

s. 58 of the land act creates short-term leases. These are leases that are:

a.       Made for a term of two years or less without an option of renewal.

b.      That is a periodic lease

c.       To which section 57(2) applies

A short term lease can be made orally or in writing. It is not a registrable interest in land.

Future leases

Under s. 61(1) of the land act a future lease can be created. A lease can be made on land to begin on a future date not being later than 21 years after the date on which the lease is executed.

A future lease which is expresses to be for a period of more than 5 years shall be void if it is not registered.

RIGHTS AND OBLIGATIONS OF PARTIES TO A LEASE

General rule set out in the lease agreement is that where parties fail to invoke their rights and obligations, statutory obligations are applied through the lease agreement.

Obligation in a lease may be forced in one or two ways:

a.       Covenants

b.      Conditions

Implied obligations of the landlord (rights of the tenant)

s. 65 pf the land act.

(i)                 Quiet enjoyment.

For as long as the leasee pays the rent, and observes and performs the covenant and conditions contained in or implied in the lease, the lessor should not interfere with the leasee. There should be no disturbance of any nature. In the case of AGIP Kenya ltd & ano. V. Gilani, the court enforced these rights by holding that the appellants who were respondents of the appellant were entitled to quiet possession and the attempt by the respondent to terminate their lease was unlawful because there was no allegation that they were in breach of any covenant or they had failed to pay the agreed rent.

(ii)               Non-derogation of land.

The landlord/lessor is required not to use or permit any adjoining or neighboring land that the lessor owns or leases that would in any way render the lease land or building in the leased land and fix or materially less fit for any purpose for which they may be used consisted to the terms and conditions of the lease. In the case of Birmingham Dudley & district banking co. v. rosse. Bowen J held that a grantor or guarantor having given a thing with one hand is not to take away the means of enjoying it with the other.

(iii)             duty to repair

At common law there was no implied guarantee by the landlord as to the fitness of the subject matter as to the letting. The broad rule was caveat emptor. (buyer beware).  There are now however exceptions imposed by common law and statutes. Under s. 65 (1)( c) the landlord has a duty  to keep the roof, all external and main walls and main drains, and the common parts, and common installations and facilities INCLUDING COMMON PASSAGES and walkways in a proper state of repair.

(iv)             Fitness for habitation

The lessor is required to ensure that if any dwelling, flat or roof is leased that the house flat or room is fit for human habitation at the commencement of the lease and shall be kept fit for habitation during the lease.

(v)               Duty to disclose material facts

The landlord is required to disclose any material defects in the leased property which is within his knowledge and of which the tenant is not aware.

(vi)             To pay all rents, taxes, dues or other outgoings that are payable in respect of the leased land.

There are certain covenants that are applied in the lease.

a.       To allow the lessor personally or by agents to enter the leased lands or buildings.

b.      To terminate the lease by serving a notice of intention to terminate the lease where the leasee is in breach of the terms of the lease.

Implied duties of the tenant

a.       Obligations to pay rent in the manner and at the time specified in the lease.

b.      To use the land in a sustainable manner and in accordance with any conditions imposed in the use of that land by the lease.

c.       To yield up the land and building in the same condition as they were in when the term of the lease began

d.      To keep all boundary marks in repair

e.       To keep all buildings comprised in the lease in a reasonable state of repair. Look at s. 67 of the land act.

f.       Not to sublease, charge or transfer the property. A tenant must not transfer charge, sublet or otherwise patched with possession of lease premises or any part thereof unless the landlord has given permission in writing.

ENFORCEMENT OF OBLIGATIOSN UDER A LEASE

ENFORCEMENT BY LAND LORD

The landlord can enforce his rights in the following ways:

a.       Distress for rent.

b.      Forfeiture of the lease.

c.       Action to recover arrears.

d.      Injunction.

Distress for rent

It can be described as the right to remove certain goods or chattels from the possession of a tenant in order to compel him to pay rent due. Under s. 3 (1) of the distress for rent act; any person having any rent or rent service in arrears and due upon a grant, lease, demise or contract shall have the same remedy by distress for the recovery of that rent as is given by the common law of England in a similar case. Under s, 4 of the act, the goods are seized after which the tenant fails to pay the outstanding rent within 14 days the seized goods are sold by way of public auction.

Forfeiture of the lease

Remedy of forfeiture allows the landlord to re-enter the premises making the lease voidable at the landlord’s option if the tenant breaches the contract of the lease. Most lease agreements contain a forfeiture clause.

Under s. 74 of the land act, the forfeiture of the lease determines every sublease

Forfeiture can be set aside by a court of law if it was procured by fraud or where the court demands relief against forfeiture under s. 76 of the act.

Under s. 75 of the land act a lessor cannot exercise the right to forfeiture for the branch of any agreement or condition in the lease whether express or implied until a lessor has served the leasee a notice of not less than 30 days. The notice must state particular breach. If the breach is capable of remedy requiring the leasee to remedy the breach within a certain reasonable period specified in the notice.

In any case, other than payment of rent requiring the leasee to make compensation in money for the breach; if the leasee fails to remedy the breach or make compensation, forfeiture will then follow.

Action to recover rent arrears.

In this case the lessor files a suit for recovery of the rent owed.

Action for damages

Where a landlord proves breach by the landlord of any covenant other than that for payment of rent the court can award damages for the breach.

Injunction

A landlord may go to court to stop certain breach of certain covenants of lease. This is done by way of seeking an injunction. An injunction can only be interrupted if the party seeking it satisfies the conditions for grant.

Enforcement by the tenant.

·         A tenant can institute a proceeding against the landlord.

·         An injunction for damages.

·         The tenant can also repudiate the agreement altogether

Termination of leases and consequential effects.

There are many ways of terminating a tenancy or win which a tenancy can come to an end.:

a.      Termination by notice

-          If a lease of is for a fixed term and notice period was prescribed in the lease then there must be termination by notice.

-          A periodic tenancy on the other hand is determined by either party giving to the other notice the length of which subject to any other law  shall not be less than the period of the tenancy and shall expire on one of the days on which rent is payable.

-          Where a notice is required under a lease to be given it must be given in the proper form otherwise it will be invalid.

-          The notice must indicate that the tenant must vacate the premises on a specified date.

b.      Termination by effluxion of time

-          Where a tenancy is for a prescribed period of time, the tenancy expires automatically on the expiry of the stipulated period without any requirement that the tenant should be given any form of notice.

-          Where the termination of a tenancy is premised on the occurrence of a certain event, the tenancy automatically terminates at the occurrence of that event

c.       Termination by surrender of the lease

-          A lease or a tenancy may be determined by the surrender of the tenants’ interest to his immediate landlord.  If the landlord accepts the surrender, the tenants term of years meres forthwith in the landlord’s reversion and is extinguished.

-          A surrender of a term’s lease may be made expressly or impliedly by the operation of the law.

d.      Termination by a forfeiture

-          Forfeiture of a lease has the effect of terminating the lease. Under s. 73 of the land act, forfeiture of a lease arises in the following circumstances:

a.       Where the leasee commits any breach or omits to perform any agreement or condition on his part expressed or implied in the act.

b.      Where the tenant is adjudged bankrupt.

c.       Being a company goes into liquidation.

-          The right of forfeiture may be exercised in the following ways:

a.       Where neither the leasee nor any person blaming through or under him is in occupation of the land in remaining in possession of the land.

b.      Enforced by an action in the court.

-          The acceptance by the lessor of any rent after service of a notice of forfeiture under s. 75 does not operate as a waiver of the lessor’s right of forfeiture unless the lessor has by any other positive act shown an intention to treat the lease as subsisting

e.       Termination by frustration

-          The contractual doctrine of frustration sometimes does apply to leases.

-          Where for instance a property is wholly destroyed or rendered substantially and permanently unfit for the purposes of which it was let. In such a case the lease becomes voidable at the option of the leasee

Charges

It doesn’t transfer interest but acts as a form of security.

2^nd and subsequent charge is available s. 54 of LRA

S. 78 OF THE land act – applies to a charge

Includes all charges effected before the act came into force

s. 7

s. 18 of the land act – a charge of land acts as a security

Every charge instrument shall contain

A.    THE TERMS AND CONDITION OF SALE

B.     AN EXPLANATION OF THE CONSEQUENCES OF DEFAULT

C.     RELIEFS THAT THE CHARGOR IS ENTITLED TO INCLUDING THE RIGHT TO SALE.

How to construct a charge under RTA, LRA &  RLA    

·         There must be an explanation of reliefs

·         Expense incurred by bank

·         Secured amount

·         Charging proviso

·         Additional covenants by chargor and borrower

·         Terms and conditions for sale and consequences

·         Relief that chargor is entitled to.

1.      Right to discharge the property

·         Notices

·         Applicable law

·         Definitions

Look at

-          s. 81 when two charges exist…time determines

-          S. 83, consolidation of charges

-          S. 84 – variation of Interest rate.( state new rates of interest in a manner that can be readily understood.)

-          S. 85 – right to discharge, discharge includes re-conveyance or reassignment of land.

-          S. 86 – transfer of a charge

COVENANNTS CONDITIONS AND

S. 88

A.

B. pays all payable rates, charges, outgoings in respect of the charged land.

Agricultural land – use land in sustainable manner.

Do not lease or sublease land more than one year without consent of the chargee.

Not to transfer the land or part of it without consent of the chargee.

Pay performs and observes the charge, rent or lease of the land.

If 2^nd or subsequent charge ensure chargor pays the rate and interest due.

If you fail to comply with the provisions, the bank can pay and add it onto your loan

s. 89- equity of redemption, it outlaws the equity of redemption.

Remedies of a chargee

Under the RLA the chargee had the powers of realization of the security by way of statutory power of sale, appointment of a receiver and institution of a suit by the chargee to recover the loan amount as a civil debt. RLA outlawed the remedies of foreclosure and the right of possession.

Under the ITPA the chargee or mortgagee would be entitled to exercise statutory power of sale, right of foreclosure and the right to take possession.

Under the land act, the chargee has several remedies. But before exercising any of those remedies, section 90 of the land act comes into play. Under s. 90, if a chargor is in default of any obligation, fails to pay interest, or any other periodic payment, or any part thereof due under any charge or in performance or observation of any covenant. In any charge, the chargee may serve the chargor a notice in writing to pay the money owing or to perform or observe the agreement as the case may be.

If the chargor doesn’t comply within two months after the notice of the service then the chargee may do the following:

a.        sue the chargor for any money due

b.      Appoint a receiver

c.       Lease the charged land or if the charge is of a lease, sublease the land

d.      Enter into possession of the charged land

e.       Sell the charged land.

Look at s. 91 of the land act- how to exercise the right to sue.

s. 92 – appointment of a receiver

s. 93 – the chargee’s power of leasing

Power to take possession of the charged land – s. 94

s. 95 – withdrawal of lender from possession

s. 96 – the chargee’s power of sale

s. 97 – the duty of chargee while exercising the power of sale. Ensure a forced sale valuation is taken by the valuer.

s. 98 – powers incidental to the powers of sale.

s. 99 - Protection of purchaser

s. 100 –

s. 101 – application of proceeds of the sale of land.

s. 103 – how a chargor may go about in enforcing his rights (relief given to the chargor)

s. 104 – the powers of the court in respect of remedies and reliefs.

s. 105 – power to reopen certain charges and revise terms.

s. 106 – how that power should be exercised.

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[1] Lack of substantive to deal with conveyancing

[2] 60. (1) Land in Kenya shall be held, used and managed in a manner that is equitable, efficient, productive and sustainable, and accordance with the following principles—

(a) equitable access to land;

(b) security of land rights;

(c) sustainable and productive management of land resources;

(d) transparent and cost effective administration of land;

(e) sound conservation and protection of ecologically sensitive areas;

(f) elimination of gender discrimination in law, customs and practices related to land and property in land; and

(g) encouragement of communities to settle land disputes through recognized local community initiatives consistent with this Constitution.

[3] REGISTRATION OF DOCUMENTS ACT.