Top 7 Tips To Take The Headache Out of Selling Property in Lean Economic Times

by | Dec 20, 2022 | Buying, Selling, Leasing & Rentals, Property Market Advisory Series, Real Estate Market Intelligence, Writer's Commentaries | 0 comments

Selling your property at any time is challenging. Much more so during an economic downturn. If it were easy, there would never have been any need for property agents. In a recession, markets go soft and depressed. Therein lies the rub.

As we look to 2023 and beyond, it is evident that, at both a national and global level, an economic recession is looming. There has been a multiplicity of factors that have made selling property, particularly, very challenging during the last 3 years. And the onslaught seems unabated.

Traits of an Economic Recession

Typically, these traits would serve as a good indication that a recession is nigh:

  • Multiple external and internal economic shocks (Covid-19 pandemic, Ukraine War, Elections, massive external debt repayments due)
  • Massive job losses and diminishing sources of income
  • Stock market decline
  • Rising inflation and her torturous twin sisters rising unemployment and increased cost of living
  • Decline in value of the currency (KES has lost more than 20% of its value against the USD between 2019 and 2022).
  • Massive external and internal borrowing by the government and high borrowing and lending interest rates (IFB issues by GoK on November 2021 recorded 13.93%!)

Certainly, in December 2022, how many of you would say that these traits seem at all unfamiliar about Kenya today?

The Challenge of Selling During a Recession

The challenge ceases, initially, to be about selling and it becomes all about the generation and qualification of leads. Positioning your offer so that you can get it in front of the right eyeballs and understanding what the market is likely to respond to is the trick.

When selling property during a recession, the principles remain the same as with any other time in any market. But conventional approaches are unlikely to hold up to the test. The condition of the market is erratic and unpredictable so what needs to change, and what is more determinable is your strategy and approach.

Seasoned property agents will also be a lot more astute about the clients they opt to work with.

Outlook 2022: Making Money in Real Estate in Kenya in 2022 & Beyond

“Understand the emerging trends, discover where the opportunities will be, and learn how you can position yourself to profit from the marketplace in 2022 and beyond ….”

Tip #1: Make Your Offer Stand Out

This isn’t just about a good script for your offer or an amazing set of property photos and videos. No. It’s the full package. You can’t just list on every property listing platform either, or select ten different agents to work with.

No. You’ll need to go the extra mile. Attract prospects by ensuring your property is looking its swankiest whenever it is shown. A dirty, forlorn-looking property that is visually flat and unkempt won’t cut it. Trim the lawns, cut the bushes – go all out to impress.

Declutter the property. It Is an unattractive proposition for any agent to show a house that is brimming with junk lying all over and makes selling property needlessly difficult.

A clutter-free space is warm and inviting and gives a mental feeling of being habitable. Clutter is a big put-off. If you can afford it, pay for professional staging and ensure your photos carry the professional polish to make prospects look twice in your direction.

Get in on the act – put together a presentable social media kit and choose strategically which agent(s) to work with.

Again, consider seriously putting some money into the marketing of your offer. Ads are a great way to diversify away from just property agents. You can work with an experienced agent on this, or choose to go it alone – up to you.

Tip #2: Familiarize yourself with the market and strategize around this knowledge

Decisions around pricing can accelerate the speed with which you can exit from the market. But how would you know where to establish an ideal price point if you are uninformed about the market in which your offer subsists?

How will you price effectively if you have no idea of who is offering what and where those offers outdo yours? If you are selling your property, do you know what other similar properties are selling for? How about how much they are renting for?

If you met a prospect and didn’t have this information and perhaps that prospect was considering the property as an income investment, what will you offer them to estimate their returns? You would have nothing to say. Selling property is aided where comprehensive information is available.

Despite the gloomy outlook of the market, there is almost always a prospect who may be considering exactly what you have to offer – but you have to position your offer to connect with them. You cannot do this if you are completely clueless about the market.

Tip #3: PRICE IS CRITICAL – Price right and qualify your leads

During a recession, the few buyers in the market tend to be more informed than the average buyer. They smell blood in the water they will only pursue a bargain. However, this shouldn’t be confused with advice to price at the bottom of the market.

As the number of distressed homeowners rises with rising loss of livelihoods and increased inflation, distress will often culminate in the loss of homes. Selling property in these conditions can be fraught with lots of anxiety. As a seller, you want to get ahead of that curve – the worst of all possible outcomes.

The right price point, at least one that invites offers, is advisable. Of all the decisions that you need to consider when selling property in a recession, the pricing decision is the most critical. You need to decide what your most comfortable exit point is – not your ideal. You want to communicate that price to the market in such a way that allows you to call attention to your offer but still exit without underselling.

Research comparable offers and make sure to qualify only those leads that present as serious prospects from the offers they present.  Qualified leads tend to understand the market and will ask questions they can confirm from available market information. They will rarely make offers that are well outside of the range of market availability unless they sense very high levels of desperation in the seller. Sure, they will want to strike a bargain. But if they are committed, they will also want to ensure that their offer sounds reasonable in order to get to a close.

Tip #4: Upgrading your property

If you are on a shoestring budget, as most sellers in a recession may be, then you want to direct any money you spend on making the property sellable to just the most critical factors.

First, any upgrades that would distinguish your offer from others within earshot are welcome only if you can afford them. What you want to make sure of is that your property meets all standards of health, safety, security and environment (HSSE).

No uncollected hazardous litter, no vermin and pests lurking in overgrown bushes, and no structural faults that could cause electrocution or personal injury. The most basic of these should be attended to first. Thereafter, go ahead and spoil your prospects with upgrades of the more elaborate kind if you can afford them – especially if they add value that exceeds their cost.

Selling property that is well-maintained is definitely more appealing.

Tip #5: Manage your expectations as you work towards the goal

Many sellers get very frustrated with the process of engaging with prospects in this kind of market. Understand that there will be very few prospects and a lot more tentativeness even among the few you will find.

Prospects are likely to be spoilt for choice given the desperation in the market. Access to credit facilities is a lot more muted in a recession too which can lead to prolonged timelines for closing even when a prospect turns into a buyer.

Within reason, sellers can navigate the market much better if they have a keener understanding of these issues as expectations.

Tip #6: Get trusted help – and be sure to take it if you ask for it.

Get the assistance of people more experienced with handling the market than you may be. There is no point in seeking help though if you are unwilling to take it.

If you are working with property agents, listen keenly for the things said and the ones unspoken. They can offer you a clear window to see the market vividly and advise you on your next moves.

Perhaps seek more to pick up the cues they will offer, rather than to merely instructing them on what to do or what your expectations are. Selling property by collaborating closely with your agents will be .

Tip #7: Don’t Miss The Exit Ramp  

It’s easy to get enamoured with the possibility that you could do better. After all, you could never go wrong with real estate, right? Capital gains were assured, they told you, right?

And, you possibly could. Don’t get me wrong.

What truly begs an answer in these market conditions isn’t whether you could do better or not, but whether you see a path to exit gracefully, even if the option before you does not present the most ideal off-ramp.

More so if you desperately need to unshackle yourself from a transaction that is weighing you down.

To illustrate, here is an experience I had in 2020/2021. I was approached by a seller who gave instructions to dispose of an apartment she owned. Four months into marketing the property we secured her an offer which she promptly rejected on price, even though it was a cash sale.

The offeror had offered a price that was slightly higher than the Forced Sale Value (FSV) price of a similar apartment in the same complex, but, naturally, significantly lower than the property’s valuation. In Kenya, the Forced Sale Value is 75% of the property’s valuation.

Let me clarify. Say a property is valued at 10 million, then its FSV would be 7.5 million – the lowest price demanded for the property at auction. In this scenario, my seller, who was already in default on her mortgage, was offered the equivalent of 87.5% on the valuation. Obviously not ideal until you consider the alternative.

The prospective buyer was market-savvy. He had elicited information that helped him determine that there were at least 3 other units in the same building that were already in foreclosure. He was willing to negotiate a higher price for my seller’s unit based on the information he had because he preferred it.

My seller flatly disengaged only to revert 4 months later with the intent of re-engaging the prospect on the terms he offered when the gravity of market conditions finally dawned on her. However, the prospect had since moved on and two years on the unit eventually went into foreclosure.

Conclusion

There is little going on in the market that can be described as normal during a recession. The idea that your capital gains are assured can quickly become the stuff of myth.

If you can hold out for a lot longer, more power to you. But if you need to, find the nearest exit for a graceful retreat at the earliest opportunity.

Will The Ongoing Title Conversions Affect Your Land Ownership Rights?

by | Mar 24, 2021 | Property Market Advisory Series, Property Transfer Guide, Real Estate Market Intelligence, Writer's Commentaries | 0 comments

If you own a piece of land in Nairobi, including an interest in land situated within Nairobi County (and eventually across the country) then you need to be appraised on the recent development of title conversions.

Context: What Necessitated The Title Conversions?

Despite the seeming suddenness of the title conversion process, it is deeply rooted in the land management and administrative reforms that have happened in Kenya prior to and since the enactment of the Constitution of Kenya 2010.

The title conversion process will be implemented in phases (batches) across all land registries in the country as an integral component of the social and administrative reforms that were envisaged by the enactment of the Constitution of Kenya 2010 which saw the introduction of new legislation designed to establish more efficient administration and management of land, curb the incidences of land fraud and introduce greater efficiency in the conduct of property transactions.

The Government of Kenya took the decision to implement these reforms as a key aspect of the country’s Vision 2030 agenda which is implemented through five-year Medium Term Sector Plans. Among the reforms include the modernization, expansion and increase of land registries, the development of a National Land Information Management System, the establishment of a Land Records Conversion Centre (LRCC) for the digitization of land records, the land adjudication and titling programme which is a social reform measure which bequeaths especially small landholders greater autonomy and benefits of land ownership, preparation of a National Spatial Plan and County Spatial Plans, land cover and land use mapping – which includes the revision of topographical and thematic maps, the review of physical and land tenure profiles, the establishment of Special Economic Zones and a myriad other reforms.

See the Sector Plan for Land Reforms 2013-2017.

Title Conversion was the natural progression from the consolidation of land laws in the country and was envisioned as an integral activity of the flagship project to establish a National Land Title Register under the Vision 2030 Sector MTP of 2013-2017, in accordance with the Land Registration Act, 2012.

The National Land Title Register would be established to contain all land records in the country with the conversion of existing land under various land registration statutes to the Land Registration Act, 2012 being one of the activities that would be implemented.

The conversion would also facilitate the transfer of the converted land records to the county land registries for improved service delivery, planning and efficiency and the issuance of both manual and digital certificates of title, as well as providing a more efficient mechanism for the resolution of land fraud and disputes.

Title Conversion: The Rollout Process

Prior to the Land Registration Act, 2012, land registration was done under several legislations that included the Registered Land Act (RLA), the Registration of Titles Act (RTA), the Land Titles Act (LTA), and the Government Lands Act (GLA), all of which have since been repealed by the enactment of the Land Registration Act, 2012.

As of the date of publishing this blog piece, there are already four Gazette notices (No. 11348 issued on 31 December 2020, No. 520 issued on 26 January 2021, No. 1706 issued on 23 February 2021 and No. 1707 also issued on 23 February 2021) issued pursuant to regulation 4 (4) of the Land Registration (Registration Units) Order, 2017, by the Cabinet Secretary for Lands and Physical Planning, notifying the general public that land reference numbers within the jurisdiction of the Nairobi Land Registration Unit have been converted to new parcel numbers.

The implication is that all transactions or dealings relating to the parcels with converted registration details shall from April 1, 2021, be carried out in the new registers. Currently, the batches against which conversion lists and cadastral maps have been issued to date only affect land held under the Nairobi Land Registration Unit.

What Will the Effect of Title Conversion be on Current Land Ownership?

In essence, the effect of the conversion will be the issuance of new title deeds under different/new registration numbers with the purposed of unifying and consolidating the registers under these hitherto laws which have since been repealed and then place the registration under a unitary law—the Land Registration Act, 2012.

It is noteworthy to mention that the conversion of titles is deemed to be purely an administrative change and is not expected to occasion the alteration of land sizes, nor to interfere with the ownership rights or in any way take away any obligations or interest thereon.

The administrative goals of the conversion are many but it is envisaged that the title conversion will reduce the complexity of land registration in the country not only in the hopes that land fraud can be reduced, but to also introduce greater efficiency at the registries.

The conversion process will eventually be rolled out all across the country and will, with each batch, involve the preparation of cadastral maps alongside a corresponding conversion schedule detailing both the old and new title numbers for all the parcels of land within the registration unit/section/or block with the corresponding sizes of each of the units on that cadastral map. The Cadastral maps will be detailed and will include information on ownership, size of the parcel and any changes that have occurred in the proprietorship of the property.

Title Conversion: What Happens To Title Documents Issued As Security?

The registered owner (proprietor) of the land is required to liaise with the parties that have a secured interest in the property to apply for the replacement which shall nonetheless have any prior registered interests noted in the registry.

Title Conversion: What Should You Do If Your Property is on a Title Conversion List?

  • Note the new title registration number and keep a record of it.
  • Compare the record of the new title registration number to the property details in the cadastral map with the record of your current title to ensure that they match. Note that ownership, size, and any interests registered against an old title will not be affected.
  • In the event that there are discrepancies noted, you may proceed to lodge a complaint with the Registrar of Lands. Upon the issuance of a gazette notice for title conversion, any person with an interest in land within the registration unit who is aggrieved by the information in the conversion list or the cadastral maps has 90 days from the date of the gazette notice to make a complaint in the prescribed format to the Registrar or to apply to the Registrar in the prescribed format for the registration of a caution pending the clarification or resolution of any complaint. The Registrar is required to resolve the complaint within 30 days of the same.

It is important when a gazette notice is issued to effect title conversion, that the proprietor or anyone with interest in the property, ensure the details of their land are correct.

However, a landowner or any person with an interest in a parcel of land listed for conversion, who may feel aggrieved by the changes to the land reference numbers, has the right to make a complaint to the Registrar of Lands.

Title Conversion: What Process Shall You Follow To Receive Your New Title

After lapse of the 90 day notice period, you will be required to surrender your current title using the prescribed procedure (provided for in the Gazette Notice specific to the conversion list in which your property appears) in order to receive your new title deed with the new title number. The notice and procedure for the surrender their current titles will be issued by the Ministry of Lands will

As a proprietor of the land you will be required to submit to the Registrar of Lands a completed Form LRA 97 with the original title deed alongside certified copies of your identification (individuals) or certified copies of the certificate of incorporation and identification documents of the directors or partners if the property is registered in the name of a corporate entity.

Due to the large number of fraud cases associated with land transactions in the country, the move to introduce the reforms and to effect the administrative changes occasioned by the changes in law was always going to be met with some degree of suspicion. However, the Ministry of Lands has gone to great lengths to assuage these fears and even offer clarifications on what the changes actually mean, and how they will be effected

In line with the land registration process now being managed and administered under a unitary legislative framework, the Land Registration Act, 2012, deed plans (Survey Maps) will effectively be replaced by what will called Registry Index Maps. Currently, you can buy survey maps from the Department of Surveys under the Ministry of Lands and Physical Planning. The same will be true for the Registry Index Maps. The key distinction between the two will be that with the Registry Index Maps, all land parcels within an area will be displayed on the map unlike deed plans which only display the records of a single parcel.

Each proprietor and anyone with an interest in land affected by the changes, as they occur, needs to inform themselves about the changes and how those changes will affect them. This means that in due course, as more and more registration units across the country are folded into the title conversion process, the general public will need to be aware of the process and to ensure that they eventually secure their rightful ownership documents.

While the title conversion process has already rolled out in Nairobi County, it is expected to take 2 years to migrate from the old system of land registration to the new process across the entire country, with all the registration units across the country completing their conversion lists and cadastral maps for the same by December 2022.

Why Enforcing Your Property Rights and Responsibilities Is So Important

by | Aug 25, 2020 | Buying, Selling, Leasing & Rentals, Property Market Advisory Series, Real Estate Market Intelligence | 0 comments

A bird in hand, they say, is worth two in the bush. Sometimes we get distracted by our toils and concerns as we work towards that often-elusive “brighter future” that we fail to notice the things that would trip us up – neglecting our responsibilities, or failing to observe the schemes that may derail our grand plans – as we pursue even more.  Enforcing your property rights and maintaining the responsibilities created by your ownership of the same is an obligation placed on every property owner.

If you own a piece of land or some form of property, the onus is upon you to ensure that you meet the obligations that come with owning that property. Most land-owners, particularly those who invest primarily for capital gains, fail to consider the possible outcomes of leaving their land unattended or, otherwise maintained by the standards of the obligations placed upon them merely by owning it. The very real risk of losing your property ownership happens at every moment and instance you, the owner, fail to enforce your rights or meet your obligations.

“Strengthening rights is dependent on strengthening the connections – conceptually and behaviorally – between rights and responsibilities.”

– Arthur J. Dyck, Rethinking Rights And Responsibilities: The Moral Bonds Of Community

Property ownership is secured and administered by law, which also clearly defines ownership, the rights and responsibilities that attach to it. Ownership rights bestow to the holder the discretion to deal with the property as they deem fit within the law. The single greatest threat to property owners rights might just be inaction on their part in securing those rights by duly exercising both the rights and the obligations created by the mere act of ownership. Sounds simplistic I know, but indulge me by reading on.

Enforcing Property Rights and Responsibilities: A Simple Comparison

Let’s draw a simple comparison, for the sake of understanding, of ownership rights and responsibilities with another asset which may be privately owned but largely operated in public, say a motor vehicle.

If you bought a car today (ok, even yesterday!), you would be obligated (by the laws of the land) to register it and operate it within certain rules. For example, you may only operate it, or cause it to be operated by a duly licensed driver. You would be obligated/duty-bound/responsible to insure it, ensure that it bears its designated registration marks, and ensure that it is operated safely and within the law. If it is involved in an accident, for example, or even say in the commission of a criminal act, you will become liable, as its owner, to the extent that the law deems. You will be required to pay any import duties and taxes before it is registered. If that vehicle is a public service vehicle, you may bear even heavier responsibility with the imposition of additional regulations as regards condition, operation of the vehicle. If you fail to meet your obligations, your rights of ownership over the vehicle may be interrupted. Your license may be revoked. Your vehicle may be impounded. It may be subjected to inspection to assess its road worthiness. You may have to pay fines and penalties for any other breaches and infractions of laws and regulations that govern the use and operation of motor vehicles that you may be subject to.

Would it be correct then, to assume any different with an asset such as land?

Enforcing Property Rights and Responsibilities: What Are Property Rights?

When you own real property, you have certain rights that go along with that ownership, including:

  • Right to control and possession of your property
  • The right to confer use of the property to others (i.e. the right to lease or license your property)
  • Right to disposition (the right to transfer the property – by sale, by gifting or by succession/inheritance)
  • Right to privacy, right to use and the right to quiet enjoyment. These include the right to exclude others or use the property to secure development finance, for example.

Complementary to these rights are several others which attach to the property on account of the ones above. For instance, the owner of a property has the right to subsurface rights meaning that they can mine valuable resources on the land (again, within the regulations permitting the mining of natural resources). If the property is adjacent to a natural water body, say a river or lake, then the owner has the right to use the water say to fish or irrigate their land or for such other permissible use. These rights are often referred to as riparian rights and may be governed by laws such as wetlands management, environmental and conservation laws. Equally, an owner has the right to use the surface of the land and may make improvements/developments to the property subject to say the zoning laws and local authority ordinances within the jurisdiction that the property falls (development rights). They have the right to use the space above the land subject to any preferential rights that may take precedence over this right. For example, a land owner situated close to an airport may be restricted from building a structure taller than a certain height, or number of floors.

You cannot protect that whose existence is unknown to you. Knowledge of your responsibilities is the surest way of securing your rights to ownership of the property. It is imperative to understand what responsibilities are created on the owner of the property because ownership is only secure if you exercise both your rights and responsibilities.

Enforcing Property Rights and Responsibilities: Some Practical Measures

So, you’ve gone ahead and purchased a property and had it duly registered in your name. What basic steps can you take to proactively secure your property rights? You own the property but are there any natural or unintended consequences of failing to enforce your property rights? Under what circumstances could you lose your ownership rights over their property? Why would it be necessary for you to understand any of this?

Acquiring land usually requires significant financial resources and the consequences of failing to secure your property rights would, therefore, come at a high price. With the likelihood that you could lose your property, the less painful choice would naturally be to do all within your means to enforce your rights.

This list is far from exhaustive but here are some basic measures you can take to protect your property rights:

#1.  Enforcing Property Rights and Responsibilities: Visit your property regularly and be appraised of its condition.

Ensure that you regularly visit the property, or have an independent pair of eyes watching over your property. This will help you establish that your right to control and possession of your property is free and clear and is not being infringed upon. In the alternative, take measures to protect your interests. This will also ensure that you are appraised of new developments in the area and understand factors influencing property values.

#2.  Enforcing Property Rights and Responsibilities: Property Markers, Delineation of Boundaries, Fencing and Signage.

Ensure that you not only know the boundaries of your property, but that these are clearly delineated according to official property maps. This may require you to have your property beacons reestablished and for you to put in place physical measures, for example fencing and property signage warding off potential interference. If your property boundaries have been violated by a neighbor (encroachment) you might attempt to mutually arrive at a consensus on how to resolve the matter without undue or expensive litigation. This may take the form of hiring an independent property surveyor to delineate the boundaries afresh and to have the issue documented and recorded in the event it is required for future reference or resolution of further disputes. In the case of squatters, you will need to take more drastic measures such as reporting the matter to local authorities to have them removed. Depending on how long they have settled on your property, the period of illegal entry and occupation can allow squatters to counter your claim to ownership and might even give them access to apply to the courts to have your title extinguished. At the earliest moment, you should not only notify the authorities and the trespasser of their infringement on your property rights, but you must also demand that they immediately desist from the property forthwith. It is important that you have documentary evidence of whatever measures are taken to remove trespassers. You might also want to demand proof of any legal interest a trespasser has on your property and to document this so that they may not later rely on or adduce proof of legal interest beyond what they originally stated or provided.

#3.  Enforcing Property Rights and Responsibilities: Property searches.

Ensure that you regularly undertake a search on your own property. This will help you ascertain that there haven’t been any irregular actions performed on the property that you may be unaware of or uninformed about. What would the search reveal? It might reveal any changes to ownership and/or ownership rights, any registration of restrictions against the property or such other notable information relevant to you, the owner.

#4.  Enforcing Property Rights and Responsibilities: Keep up with your obligations

Ensure that you keep up with any obligations for land rent and rates, and these are maintained in your name as the title holder. This is only applicable for leasehold property. Certain rights, for instance the right to transfer property, will be impeded where you fail to meet these obligations. In the event of fraudulent transfer, you may also be able to support your claim by demonstrating that you were indeed the one who undertook maintenance over your property.

#5.  Enforcing Property Rights and Responsibilities: Keep and maintain records of obligations in owners name(s)

Ensure that any utilities or services connected to the property are made out or registered in your name. Where registered in the name of third parties, especially individuals who may be leasing or otherwise using your property, they could potentially use this as evidentiary proof of exercising ownership rights to your property.

#5.  Enforcing Property Rights and Responsibilities: Registration of restrictions

If you have encountered scenarios where you find people actively enquiring about your property as if it is on sale with the full knowledge that you never put the property up for sale, then you may even consider more austere approaches to protecting your property for instance registering a caution on your own property and keeping it in place as long as you hold the property.

Enforcing Property Rights and Responsibilities: Why Is This so Important?

There is an alarmingly high volume of land fraud cases and the fraud is becoming increasingly convoluted. Even more concerning for property investors, are the twin problems of squatters and illegal allocations which deprives many property owners of their rightful possession and control over their investments.

One of the more interesting cases reported in the media lately involves a case where a fraudster secured financing from a financing company which proceeded to register a charge on the property. The registered owner only discovered the fraud when he attempted to sell a portion of his property and his buyer discovered that there was a registered charge on the property after he had already paid a deposit on the agreed purchase price (which the seller then had to refund).

At issue is the contention that the financing company, which purported to issue the loan and proceed to charge the property on the basis of sound and proper due diligence, is now making a claim to dispose of the property on the grounds that the “owner” of the property had been in default since the loan was issued in 2016. The individual who had received the funds had somehow vanished into thin air and the actual, verifiable owner, now has to contend with the very real possibility of losing the property.

Did the owner lose the property you ask? Sadly yes. In this and other similar instances, there is no way to determine how the case might play out in the end. I would hate to be in the owner’s shoes being dragged into a legal tussle over a huge debt that I never benefited from and being unable, in the intermittent period, to do anything with the property as it remains the subject of a legal dispute, or as in this case, losing your property due to fraudulent act.

The court noted that the owner’s conduct showed “the image of a man who dealt with the issue in a casual manner”, that despite having reported the alleged forgery to police, he never gave samples of his signature for verification, never followed up the issue with the police, when confronted with the information that the property had been charged he still tried to sell the property and never did anything to protect his ownership rights. The owner only sought the protection of courts when statutory notices were issued and didn’t even bother to enjoin the borrower (the company that charged the property) in the proceedings, or attempt to press any criminal charges against the individual who committed the fraud. The property was valued at approximately KES 80 million and the matter is under appeal.

Can you imagine walking in his shoes?

Conclusion

Before you find yourself in the middle of legal entanglement, consider how much simpler, better it would be to just enforce your property rights. Land tends to elicit a lot of emotion because of its intimate connection to human aspirations, historical injustices and cultural roots. It doesn’t help that it is also regarded as a significant measure of one’s success. Taking the steps to enforce your rights can make the difference between a long and protracted legal battle which could culminate in significant losses or the peaceful, quiet enjoyment of your labours.

The practice of enforcing your rights starts at the point of engaging to acquire the property (due diligence). But it doesn’t end there. It extends to keeping up with the obligations that ownership places on you, and a culture of maintaining your interest beyond the transaction to acquire the property or merely acquiring it for speculative purposes.

One of the simplest ways to ensure that your land is secure is to ensure that the land is under productive use, even if it is just a simple project that can generate some income.

Don’t be one of those people that tend to forget their obligations and only remember their rights. There cannot be one without the other! If you require assistance securing your property and don’t know where to start, drop us an email on info[at]realestateguru.co.ke – let’s have a conversation to see how we can help you.

The 5 Key Things You Need To Do Before Leasing Land In Kenya

by | Aug 12, 2020 | Buying, Selling, Leasing & Rentals, Property Market Advisory Series, Real Estate Market Intelligence | 1 comment

Before you enter into an agreement for leasing land in Kenya, it is essential that you have a clear understanding of the nature of the undertaking you are committing to get into. Private leases for land are invariably for long periods of time, some even as long as twenty years or longer.

Because of the commercial interests you would be creating around the land you intend to lease, you would naturally want to be assured that you will enjoy unfettered use of land for the duration of time that you have agreed to contract it out on lease from its owner(s).

You would want reasonable assurance that the arrangement is rock-solid and will not be interrupted over the tenure you have agreed on. The dispensation of leases is to a large extent the subject of The Registered Land Act, Chapter 300 of the Laws of Kenya

Leasing Land In Kenya: Why Lease & Not Just Buy?

Leasing Land in Kenya has not been a common or traditional practice associated with the proprietorship of land. However, it is becoming an increasingly popular enterprise as the availability of agricultural land close to the erstwhile urban centres in the country continues to wane and also due to the high capital outlays for outright purchase of commercial land which has good access to surfaced roads and public transport networks.

Ultimately, people and businesses lease land for a variety of reasons, usually with an underlying commercial reason or benefit which ensures the sustainability and profitability of the respective enterprise they wish to undertake.

It is notable that one of the many benefits (motivators?) of leasing land in Kenya is the tax-reducing nature of lease costs over business revenues and profits. In urban areas, some of the most common enterprises leasing land include roadside eateries (food vibandas and mama mboga stalls), fuel stations, garages, carwash businesses, churches, roadside car dealers and so many more. An increasingly popular venture on leased land is container malls/parks – semi-permanent structures established for business premises which can be easily relocated upon expiry of the lease.

Leasing of land for agricultural purposes is far more common. The types of agri-business that lease land range from commercial-scale green housing operations which produce a wide range of horticultural produce like wheat, flowers and even herbs, to animal-rearing enterprises which lease land for the purposes of breeding and rearing stock for sale to markets within proximity of the leased land.

The purposes are as varied as the commercial interests may be. Personally, I even know entrepreneurs who have leased land for the purpose of growing commercial forests.

Leasing Land in Kenya: What is a Lease?

A lease is a commercial interest in property granted by the owner of the property (proprietor/lessor) that confers on the person granted that interest exclusive possession of the property (lessee/tenant) for the period of time and under the terms and conditions defined under their agreement.

Basically, the agreement to lease defines the individuals making the agreement, the period of the lease, the rental/lease fee and all other terms and conditions under which the agreement has been made.

Under Section 56 ( a) of the Land Act no. 6 of 2012, the proprietor (owner) of land may lease it, or part of it, to any person for a definite term (or if for an undefined period either party may terminate the contract of lease). 

Are you considering leasing land to promote or develop a commercial interest? What then are the five most critical things you need to do before you make the arrangement to lease land from its owner(s)?

# 1. Search For The Property

Now that you have established that you want to lease land for commercial reasons you will go to the market to find potential lessors willing to lease to you land suitable for your purposes. You will have identified the why (usually the reason for which you want to lease like say an agri-business) and the when (when you wish to commence operations and for how long you want to run the lease). And once you find potential lessors, you will negotiate some basic terms (I hear people using the phrase “irreducible minimums”) before hashing out a final agreement.  

You can source for information from a wide variety of sources including the internet, newspapers and other publications, property agents, lawyers, local administrators and many others.

#2. Undertake Due Diligence

In law, there is a general principle which loosely translated from its Latin maxim, nemo dat quod non habet means that “one cannot give what does not have”. Undertaking due diligence can therefore be loosely said to the process of establishing whether the person giving you the “thing” has the capacity to do so. While the principle largely relates to contracts of sale, in the case of leases, it is relevant.

This process should help you clarify and ascertain the following:

  • The Who: Who exactly owns the land you intend to lease
  • The What: What are you leasing and exactly how much acreage are you receiving?
  • The Where: Where exactly is the land you are leasing situated?

A lessor cannot purport to issue or confer the rights of ownership of land such as exclusive possession unless they really, truly are the owner of the land, unencumbered. It will be important to not only clearly identify the owner but also to identify the parcel of land you are leasing including its boundaries.

You will also want to ascertain that there are no other third parties that have rights to the land that may supersede or interfere with the right to exclusive possession being granted to you by the owner. These can be revealed by a simple search and may show up as registered interests such us encumbrances.

Why is any of this necessary? Let’s take a simple example where a landowner seeking to lease out the land does so to an unsuspecting tenant without disclosing the fact that the property is under a bank charge. Here are a few challenges that will arise in this scenario:

  • What happens to the lessee/tenant in the instance where the owner defaults on their loan repayments during the tenure of the lease?
  • Would the tenant have made the same decision to lease the land were they aware of this fact and would they have opted for an alternative commercial engagement that would have completely avoided the risk of a legal entanglement?

These are just some of the possible complications that could arise. Now perhaps you may be perceiving the reasons why it is important to ensure that you are fully appraised on the ownership and status of the land you want to lease before you proceed.

Due diligence is often thought of as merely a formal search exercise. However, one can also take a broader view by asking probing questions about the veracity of ownership and by going as far as visiting the local administration offices to ascertain the status of the land.

Sometimes, an informal enquiry can yield much more than a formal one, providing many unexpected answers. It is usually a sign of bad faith when certain revelations on paper are markedly different from what is stated as knowledge on the ground, especially if the owner fails to disclose a material fact or makes misstatement of facts.

If you are going to have commercial interests established on a piece of land, it behooves you, the investor, to ensure that that interest is protected. It starts with a keen undertaking of due diligence measures.

#3. Have a Written Agreement

While certain oral agreements can be recognized by law in the event of a dispute, there may be finer points within the agreement that can only be clarified by having a written agreement. It is therefore good practice to always have a written lease agreement.

The preference for a written agreement would really be to ensure strict adherence to what was discussed and concluded by both parties but it also favors you who is taking on the lease by ensuring that your rights are recognizable in defense against an owner who may seek to renege on your agreement.

A written agreement also precludes messy oral arguments outside of what was agreed upon and recorded. The law only recognizes oral leases that do not exceed a two year, non-renewable term. The agreement will cover much wider terms other than price and duration to include issues such as assignment of responsibility for government levies (ground rent and rates in the case of leasehold land), maintenance, removals as well as any other responsibilities, termination of the agreement, assignment of costs for restoration of the property, payment of registration fees and much more.

A written agreement helps the parties to go over and beyond the legally implied rights and responsibilities. The debate as to whether to have an oral or written agreement can be solved by the following question – do you want to be crystal clear as to where both parties stand, and in particular, in the event of a dispute regarding the land?

#4. Register Your Lease Agreement

If you are entering into a lease agreement that is, at the minimum, a two-year renewable lease agreement, then it is important to have the lease registered under the relevant land registry. 

Get professional assistance to have the terms and conditions of the agreement brought into resolution with the lessor. If you want to exercise the option of renewing the lease at the end of the term or to have the first right of purchase in the event that the lessor wants to sell the land at the end of the lease period, it is important to ensure that the lease is registered.

The reason for registration of leases is for the protection of both the lessor and lessee’s rights to be duly noted with the implied rights, duties and obligations of both parties taking precedence. In the event, for example, that a landowner is declared bankrupt or dies, a registered lease may serve the purpose of recognizing and protecting the rights of the lessee when a trustee to the bankrupt person or administrators to the estate of the deceased lessor are appointed.

For the purpose of registration, leases that have a duration of for 25+ years are treated in much the same way as transfers, with stamp duty payable at the applicable rates for transfers.

Ultimately, however, even with a registered lease, the rights of ownership still vests with the lessor so that, for example, the lessees may not sublet the land without the authority of the lessor

#5. Create an Exit Plan

It is rarely considered at the beginning of a venture to have an exit plan or to plan too many steps ahead of all the details that need to be sorted out at the time you are entering into the lease agreement. However, it is smart practice to have a clear sense of the end from the beginning, especially for commercial reasons.

One of the implied conditions on expiry of a lease is that the lessee will hand over possession of the land in the condition in which it was delivered to him by the lessor. While this may be provided for in the registered lease agreement, it is important to consider clearly and plan ahead for the exit, which will include planning for what happens to any improvements you may have added on to the land in the time you were leasing it, and the costs associated with returning the land back to the condition in which it was originally handed to you, the lessee.

Your exit plan simply provides for the period immediately prior to disengagement with the lessor.

Leasing Land in Kenya: Conclusion

After signing a new lease agreement, be sure to have it registered. Some lessees go as far as to even register restrictive instruments. It may seem like “overkill” but in the age of broken agreements, it may eventually prove to be wisdom.

By recording your interest in a property you are leasing, you will secure your right to be notified of any changes in the status of the property, thereby avoiding the misfortune of later learning that the property was perhaps sold by the owner to a third party or that the property has been encumbered during the tenure of your lease to a third party with rights that supersede your own and which may later interfere with your tenure over the property, even when you are keeping up with your obligations to the owner.

If you would like to understand more about leasing land in Kenya, a good place to start is to understand some of the jurisprudence established on the same. Here is another resource that can help to clarify issues like the difference between a licence and a lease, rights, obligations and other implied conditions of a lease on both the lessor and lessee and much more.

Active Political Goodwill Sorely Required to Achieve Land Reforms in Kenya

by | Jul 2, 2020 | Real Estate Market Intelligence, Writer's Commentaries | 0 comments

Prior to the enactment of the Constitution 2010, the Government of Kenya began to take robust and progressive steps towards land reforms in the country, addressing many of the lingering issues on the administration and management of land in the country through a raft of new legislative, policy and administrative reform measures. Land, after all, was one of the fundamental cornerstones of the country’s independence struggle.

Land Reforms in Kenya: Ndung’u Land Commission

Among the many initiatives undertaken included the establishment of the Ndungu-led Commission of Inquiry into Illegal/Irregular Allocation of Public Land in June 2003. While this commission had its predecessors, it was perhaps the most comprehensive, authoritative and widely regarded endeavour at establishing the corrupt, historic and systemic malpractices in Kenya’s system of land tenure, specifically regarding public land and its misappropriation by the ruling class. The commission released a report at the conclusion of its mandate which reveals the scale of corrupt practices in land allocation that have largely benefited the political class in the country, and a whole litany of challenges within Kenya’s land tenure and administrative systems dating back to the legacy of our country’s colonial days, the exploitation and manipulation of legal loopholes and improprieties of the ruling class in the immediate post-independence period and onward to the time the report was prepared. To its credit, the Ndungu Commission did an extensive and thorough exposé on the systematic way in which established public land administration procedures which were designed to protect the public interest, were leveraged and grossly perverted to serve the interests of shadowy private and political figures.

It is worth mentioning that the full report has never been made publicly available due to its indictment of the country’s ruling elites.

Land Reforms in Kenya: Formulation of National Land Policy

Simultaneously, the formulation of a National Land Policy involving the full spectrum of stakeholders commenced in earnest in 2004 and culminated with approval of the Draft National Land Policy (2007) and preparation of Sessional Paper No. 3 of 2009 on the National Land Policy for presentation to Parliament in June 2009.

All these efforts were geared toward the much-needed land reforms in Kenya that were envisaged to bring the country into a more equitable society where the rights and freedoms guaranteed under the new constitution would be attained.

Along the way, however, land reforms in Kenya have faltered or been still-birthed – held captive to the political machinations of successive regimes. To understand why, one might find clues in the political and elite class’ illegal allocations and theft of public land and their domination in terms of private land ownership. The fish truly rots from the head!

Land Reforms in Kenya: Legal, Policy & Institutional Reforms

These reforms required to be anchored in legal, policy and institutional frameworks, improved administrative processes and efficient management structures. It also required bold measures by the executive to address the past corruption, a herculean task by no means because the names involved, particularly in the illegal allocation of public land, span the breadth of Kenya’s political bigwigs and dynasties.

The administrative land reforms and initiatives thus far have been, to some considerable extent, inclusive and consultative, taking into account multi-sectoral stakeholder inputs from the public, private and civil society organizations, as well as expert opinion in arriving at the raft of measures recommended for land reform in the country.

Land Reforms in Kenya: Progressive Gains

While the reforms that have taken place cannot be dismissed as paltry, they could be described as slow, perhaps even token. Notably, there was the passing of the Matrimonial Property Act, 2013, which ensures greater protection over matrimonial property for the benefit of both spouses and brought in some degree of social equity, in particular for women who were hitherto disadvantaged in matters of family property.

Indeed, in terms of administrative reforms and the improvement of service delivery, there have been huge strides taken forward including the digitization of land records in some registries and steady progress toward rolling out of the land information management systems (LIMS). In the past 10 years as well, a vast majority of the legislative and policy reform agendas and milestones have been achieved. The Ministry of Lands and Physical Planning has also put developed a raft of regulatory proposals and draft policy frameworks all geared towards administrative reforms.

However, the underlying measures to bring greater equity in the distribution of land resources in the country have hardly taken root. There are established pathways for the progress towards land reforms but the pace at which the impact of these reforms will be felt is in great part dependent and hinged on political goodwill.

The bigger question, with a clear overview of Kenya’s murky history on this issue as detailed in the Ndungu report, is whether successive governments are willing to pay the political price for what these reforms will ultimately cost. It is unlikely that they will because those who stand to lose the most out of the reforms process are the very ones of whom reforms are demanded.

This legacy is likely to just be passed on from one government to the next. Certain changes might happen, but the real issues that have brought about inequality in land justice and reform might take longer to bring to resolution.

A good example to illustrate this point would be the stagnation of the bill on the minimum and maximum land holdings which was one of the most contentious issues during the process of enactment of the Constitution of Kenya 2010.

Five years after the law was drafted in line with the mandate of the Constitution Implementation Commission (CIC), the bill is yet to come to life in legislation as was envisaged by the constitution. With the rushed timeline that the CIC had to complete their mandate, the proposed bill was not subjected to public participation. The process by which the bill was developed lacked sufficient stakeholder engagement and was reputedly hurried through without significant research implying that certain thresholds on transparency, accountability and good governance would not be met as anticipated by the constitution. Given the constraints, it is debatable whether the CIC could have achieved more. Certainly, it is telling of the current government’s political goodwill to complete some of these pending tasks in service to the goals of land reforms.

Unlike most other investment markets in the country, while the real estate market is quite robust, it lacks significant regulation and protection mechanisms across all market segments that can adequately cater to investors. For example, capital markets have a unitary regulator, the Capital Markets Authority while traditional lenders of financial products (mortgages) are governed through existing frameworks of regulation on banks, specifically the Central Bank of Kenya. However, there are currently myriad investment products in the real estate market that sold on the open market that are not regulated except only by self-regulation mechanisms.

For instance, off-plan investment schemes and other non-regulated financial products may be benchmarked against industry-practice but the channels for redress to investors when property developers fail to deliver are negligible. Much more needs to be done to rein in other players including marketers and advertisers, property developers, industry consultants (valuers, property agents, architects, lawyers and engineers).

Back to the issue of minimum and maximum holdings, some context is required to understand why this was a critical concern at the formulation of Kenya’s Constitution 2010. For the rural masses often living in poverty and even for many families that might be considered as middle class, land is primarily a resource for the sustenance of livelihoods. They perceive and use land for economic productivity and for self-sustenance. However, for those in the upper echelons of society, land is primarily a store of value, for the accumulation of capital gains and a tool for the transmission of wealth across generations. It may also be considered a factor of production for them, but the impact on their livelihoods and survival is of far less significance than it is to say a subsistence farmer. This presents the problem that while land is the greatest factor of production, productivity would likely to remain low if land large tracts of land were concentrated in the hands of the few, as it is in Kenya.

Indeed, for the political class who can leverage on national development agendas, there would be a negligible need to focus on land as a factor of production when they could simply steer development in the direction of their holdings and reap off higher land values that come with an increase in settlement. With only 20% arable land, the goals for which the Bill was conceived included the promotion of equitable distribution of land, regulation of subdivision of land to ensure that agriculturally productive zones were retained as such, preservation of ecological zones, creation of employment and reduction of poverty, sustainable utilization of private land and promotion of national security and economic stability.

Without adequate reforms and regulation, the prevailing inequalities will continue to persist. Investors will require to make sound decisions with a clear understanding of microeconomic risks. Stakeholders can do more to proverbially hold the feet of the ruling class to the fire in ensuring that reform and regulation become institutionalized and engineered into the fabric of land administration in Kenya and to protect investments in the marketplace. There is plenty of hard work still left to be done but for the security and heritage of future generations, it will take a radical rethinking of policy and a forward-looking attitude that doesn’t just focus on the legacy of colonialism and the bane of political patronage. Will that happen any time soon? That’s anyone’s guess.

An authoritative report published by the African Centre for Open Governance (Africog) on the progress of the implementation of the Report of the Commission of Inquiry into the Illegal/Irregular Allocation of Public Land (the Ndung’u Commission), and by extension, on the progress of land reforms in Kenya, indicts political actors in implementing the necessary reforms required to address land injustices in Kenya. While much has changed in the 10 years since, there is still very slow progress!

Adverse Possession: Why You Could Lose Your Ownership Rights to Squatters

by | Jun 15, 2020 | Property Market Advisory Series, Real Estate Market Intelligence, Writer's Commentaries | 2 comments

In the simplest of definitions, adverse possession can be described as the result of what happens when a landowner (titleholder to a property) tacitly allows a “squatter” to live on their property without taking action to enforce their right of ownership over the property over a specified period of time. A squatter, as distinguished from a tenant, is a person who settles on or occupies a property with no legal claim to it.

In Kenya, the Section 7 of Limitation of Actions Act, Chapter 22 of the Laws of Kenya states “An action may not be brought by any person to recover land after the end of twelve years from the date on which the right of action accrued to him or, if it first accrued to some person through whom he claims, to that person.

The same statute, in Section 38(1) states that “Where a person claims to have become entitled by adverse possession to land registered under any of the Acts cited in section 37 of this Act, or land
comprised in a lease registered under any of those Acts, he may apply to the High Court for an order that he be registered as the proprietor of the land or lease in place of the person then registered as proprietor of the land.

The effect of these clauses is simply that anyone who has had continued, uninterrupted use of land which violates the interest of the proprietor of such land for period of up to 12 years, can apply to the High Court in Kenya to have the land registered in place of the original proprietor, in effect having the rights of ownership appropriated to themselves.

Most absentee landowners – whether because they live in-country but far away from their investments, or whether they live abroad – rarely have someone trustworthy who they can assign responsibility for their property. That being the case, many choose to assign the responsibility to a relative or such other nominee until such time as they are available to take possession and undertake some sort of activity on the property. In some instances, the property has been purchased sight unseen and so the actual owner may not even be able to ascertain the physical location, landmarks or dimensions of the property.

With increasing frequency, unfortunately, having built their livelihood on such property, those not expressly appointed with custody, and those who may trespass on another’s property can legally take ownership of such property without further reference to the actual owner (title holder) by the claim of adverse possession.

Where such a custodian is able to meet the standards set out in jurisprudence, they can successfully apply to have your rights of ownership over the property extinguished. The individual needn’t even be someone known to you, the landowner. They only need to meet the prescribed standards determined by the law.

Adverse Possession: Legal Precedent & Effect

The law, in form of judicial precedent, has established that adverse possession is fundamentally a situation where a person takes possession of the land and asserts ownership rights over it while the person having title to it omits or neglects to take any action against such person in the assertion of his title for a certain specified period.

Adverse possession, which is also referred to as “squatter rights”, should not have been asserted by some use of force, neither should it have occurred in secrecy or without the authority or permission of the owner. The law deems that the proprietor of land has consented to such possession if it has occurred within the period stipulated and has occurred openly, continuously and without interruption.

In Black’s Law Dictionary, adverse possession is defined as the enjoyment of real property with a claim of right when that enjoyment is opposed to another person’s claim and is continuous, exclusive, hostile, open and notorious.

The number of judicial precedents that describe adverse possession and the principles required to demonstrate it and those surrounding its determination in law are numerous. And while the individual circumstances may vary from case to case, judicial precedent is highly instructive in determining the conditions against which a plaintiff’s claims can be entertained and the technicalities around the individual case can provide guidance, on the balance of facts, as to how courts are likely to rule on any subsequent matters.

The principles of adverse possession primarily recognize that land is a factor of production and that for this reason, therefore, it would be inequitable to remove the person(s) who has (have) been utilizing the property (within what is often referred to as the statute of limitations), especially where they can prove that they have established their livelihoods on that property and have had unfettered use of the same for the period prescribed in law. The matter for determination by courts is one of equity – ensuring that the rights of the “deemed” owner are not interrupted.

To assert adverse possession, squatters who, for example, erect their home or permanent structures on the property, subdivide the property, fence off the property, connect utility services to the property in their name, conduct some sort of livelihood activities including operating businesses on the property can make and lay claim to such property. In judicial precedent, to assert their claims, squatters on your land will invariably cite raising their families on the property, conducting rites of passage ceremonies (including marriage ceremonies) and even burials on the property.

In effect, adverse possession extinguishes the rights of a titleholder and confers the rights of ownership to the person who has enjoyed unfettered possession of the property for a period of 12 years or more. Simply stated, the one in possession of the property becomes its new owner.

Adverse Possession: Absentee Owners

It is incumbent upon every investor to take measures to protect their assets. Adverse possession proves that it isn’t merely sufficient to hold title to your assets and brings to life the legal maxim that possession is nine tenths of the law! The sad reality of investing in a property only to lose it to squatters is perhaps a most unfortunate happenstance but it is a fate that has befallen many property investors in Kenya.

In most instances today in Kenya, the circumstances that give rise to adverse possession quite often arise without the knowledge of the owner. This is particularly the case with absentee owners, mostly Kenyans residing in what is quintessentially referred to as the diaspora. With the myriad property subdivision schemes all across the country, it is not uncommon for many property buyers – even locals – to buy property, specifically vacant land, in places where they do not live or frequent regularly. Without ascertaining their purchase beforehand, many might typically be unaware of the actual condition of the property, including whether it is actually occupied even at the time they acquired it. Some typically allow the seller to continue using the property in their absence and many acquire property mired in entanglements by failing to undertake proper due diligence or by acquiring property held under letters of allotment (without formal title).

Adverse Possession: How Can You Secure Your Assets?

The most obvious question that many would therefore raise is, “How can one escape such a fate?” The simple answer would be to enforce your rights as an owner, in whatever way, shape or form. Obviously, it would be ideal to simply enforce the right within the law, and of course before the expiry of a period of time where your rights of ownership would become tenuous. In Kenya, that often takes the form of unsanctioned evictions of squatters from the property. In some instances, property owners have taken the law into their own hands by using underhanded tactics, including the wanton demolish of any temporary or permanent structures erected by squatters by whatever means necessary including bulldozing and arson!

But are there more “reasonable” ways to deal with the problem?

It is needless for a titleholder to lose their property due to adverse possession. In this market, most smallholder land is acquired with the view to develop down the road, perhaps construct a residence in the future, or held for a period of time as investments and then eventually disposed to a secondary buyer for capital gains. In the intervening period between the time they are purchased and eventually developed or disposed of, most remain vacant and unused – for the most part, because they are either so highly fractured that they might not be able to viably sustain any robust economic venture or because their owners live at a distance and cannot manage the properties themselves. Enforcing your property rights shouldn’t be too difficult if there was a consideration of some economic activity that the property could sustain, prior to its acquisition, or if you had more than just capital gains in mind at the time of the acquisition, or if your plans to develop the property are not in the too-distant future.

Of course, you may not be able to make predetermination of either of these scenarios at the time, or prior to acquisition. However, there are some other basic measures that you can take to secure your property.

  • You can appoint a manager/trustee to ensure oversight of your property and provide effective reporting of developments in the neighbourhood over the time you hold it. By engaging an independent property manager/custodian over the property and ensuring that you regularly change out such custodians so that at no time has any single individual exercised possession over the property for longer than the period defined in law entitling them to take adverse possession of the land ensures that.
  • Physical deterrents: You can ensure proper demarcation of the property by erecting fencing and even erect temporary structures on the property to deter encroachment and secure your ownership.
  • Undertake some sort of legally contracted commercial activity on the property. You can undertake high-value (but low-impact) projects that don’t require frequent, hands-on project management which can generate handsome returns into the future.
  • Keep up with the payment of any government levies and dues on the property and ensure to keep records of the same demonstrating that you have maintained the privileges of the ownership of the property.
  • Depending on the location of the land, you can aggregate your property with others in a cooperative (chamas) to scale and increase your ability to undertake commercially viable projects, increasing the productivity of their holding(s).

If your property has already been adversely possessed by a squatter(s), you can get a lawyer to write them a demand to vacate the property or face legal action or report the trespass to the local authorities, including administration officials and police.

It is best to do so in writing to ensure that there is a physical record of your objection to the use of the property by the trespasser. The possible solutions around what to do with vacant land are innumerable and rather than expose yourself to adverse possession you may exercise any of the many options at your disposal, even including contractually leasing your land to others who can provide a return on your investment. You can even deploy a combination of these and several other strategies to effectively deter the threat of adverse possession by squatters.

The incidence of adverse possession claims is seemingly on the rise; attributable in part due to the increased investment in smallholder property fueled by speculation in growth in property values. But there are a myriad social and economic factors responsible for increased adverse possession claims and this trend will continue even into the future.

If you would like to inform yourself further on the subject, here are some select legal precedents that might help shed light on the subject of adverse possession:

These are just a few precedents that have been established in Kenya on the subject of adverse possession. Obviously, they can only offer insight based on the individual circumstances presented and a shrewd investor may be served well in taking the time to understand more comprehensively what the law says on adverse possession.

Now that you’re slightly more informed, what would you like to do to secure your property?

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