• Cautions Caveats & Restrictions: Reasons for Placing Property Restrictions

• Cautions Caveats & Restrictions: How to Place a Caveat or Caution in Kenya

• Cost of Placing a Caveat or Caution in Kenya

• How to Remove a Caveat or Caution on Property in Kenya

• Other Types of Property Restrictions

• Client Question: Can a Lease Function as a Form of Restriction?

Caveats Cautions and Restrictions are applicable in very many different circumstances. They offer property investors and third parties the legal mechanisms to protect their rights and interests.

Property, for instance, can be used as collateral to secure debt. How would a creditor or a financier be able to ensure that their funds are safe and that the owner of the property, in this example, won’t proceed to sell their property without any due reference to them?

Cautions Caveats & Restrictions: Reasons for Placing Property Restrictions

Common Reasons:

• Protecting family interests in inheritance cases.
• Securing creditors’ financial interests.
• Safeguarding tenants’ rights.
• Preventing unauthorized sales or fraud.

Caveats, cautions and restrtictions are all different forms of property encumbrances designed to protect parties interest in the property and to prevent unauthorized transactions. Here are some common reasons why someone might place a caveat or caution on a property in Kenya:

Protecting Ownership Rights or Claims: If you have a legitimate claim to ownership, such as through inheritance, purchase, or gift, you might place a caveat to prevent others from transferring or selling the property until the claim is resolved. In cases where there’s a boundary dispute or an overlapping claim, a caveat can protect the party’s interests while the issue is being resolved.

Pending Legal Proceedings: When there’s an ongoing court case concerning the ownership or rights to a property, a caveat can be placed to prevent any transactions until the legal matter is concluded. This is often done to prevent the owner or other parties from attempting to sell or mortgage the property to sidestep the court’s decision.

Protection of Buyer’s Interest During a Transaction: When a buyer has agreed to purchase a property but the transaction is not yet complete, they may lodge a caveat to prevent the seller from transferring the property to another buyer. This is particularly useful in long or complex transactions where the transfer process may take time and there’s a risk of the seller seeking alternative buyers.

Protection of Financial Interest by a Lender: If someone has lent money with the property as security (for example, through a mortgage or lien arrangement), they may place a caveat to ensure that the borrower does not sell or transfer the property before repaying the debt.

To Assert Rights in Probate or Inheritance Matters: A family member or beneficiary of a deceased person may place a caution on the property if they have an interest in the inheritance. This helps prevent the executor or other heirs from transferring the property without acknowledging their rights. This is also common when a property is subject to succession and there are multiple claimants or heirs to the estate.

Prevent Fraudulent Transfers or Sales: In cases where a property owner suspects a fraudulent sale or transfer, a caveat or caution can be placed to halt any transactions. For instance, if there’s a risk that someone with forged documents might attempt to sell the property, the legitimate owner can lodge a caveat to protect their ownership.

Disputes in Business or Partnership Agreements: When the property is jointly owned by business partners or through a partnership, a caveat can help prevent any partner from selling or mortgaging the property without the consent of all parties involved.

Protecting an Unregistered Interest: In some cases, a person may have an interest in the property that is not yet formally registered, such as a long-term lease agreement, an easement, or a right to occupy. Lodging a caution alerts others that there is an unregistered interest in the property.

Ensuring Fulfillment of Contractual Obligations: A caveat or caution can also serve as a tool to ensure that any outstanding obligations between the parties are met before a sale or transfer. For instance, if one party is supposed to perform specific duties (like making repairs or paying off certain liabilities), a caveat can be placed to ensure compliance.

Preventing Unauthorized Development: A caveat may be used to stop any development or change in the property’s use until certain conditions are met. For example, a local authority or regulatory body may restrict a property to prevent construction until relevant permits are obtained.

How to Place a Caveat or Caution in Kenya

To place a caveat on land in Kenya, follow these steps:

• Step 1: Obtain the Land Caution Form (also the Application for a Restriction Form) from the Ministry of Lands.
• Step 2: Complete the form, providing your identification details, the property details, and the reason for placing the caveat (e.g., to prevent a sale due to an unresolved dispute).
• Step 3: Submit the completed form, along with any supporting documents, to the Ministry of Lands.
• Step 4: Pay the required fees.
• Step 5: The Ministry will process the application, and once approved, the caveat will be registered against the property, preventing any unauthorized transactions.

Cost of Placing a Caveat or Caution in Kenya

Placing a caveat on a property in Kenya usually incurs various fees, which may include legal fees and government processing fees.

The specific cost can vary depending on the lawyer’s charges, the complexity of the case, and the fees set by the Ministry of Lands. As of recent estimates, the cost typically ranges from Ksh 1,000 to Ksh 10,000.

For exact figures, it’s recommended to consult with a lawyer or directly inquire with the Ministry of Lands.

How to Remove a Caveat or Caution on Property in Kenya

Removing a caveat in Kenya can be straightforward or complex, depending on the circumstances:

• Consent-Based Removal: If the person who placed the caveat agrees to remove it, they can apply with the Ministry of Lands to lift the caveat.
• Court Application: If there is a dispute, the property owner or another interested party may apply to the court for the removal of the caveat. The applicant must prove that the caveat is unjustified or no longer valid.
• Legal Fees: In cases involving court applications, legal fees will apply, and the time taken will depend on the court process.

Other Types of Property Restrictions

Lien: A financial restriction placed on property as security for a debt. The property owner cannot sell or transfer the property without settling the debt. Liens are commonly used by creditors or lenders to secure payment, and they can prevent any legal transfer of property until the obligation is fulfilled.

Easement: This grants a non-owner the right to use or access part of the property for a specific purpose, such as a pathway or utility access. Easements restrict certain uses of the property by the owner, allowing others (such as neighbours or utility companies) certain rights to access or use the land. While an easement does not prevent the sale or transfer of the property, it binds future owners to the terms of the easement.

Right of Occupancy: This is often granted to a specific individual or entity, allowing them to occupy the property for a defined period or under specific conditions. The property owner cannot evict the occupant or sell the property without respecting the occupancy rights. This right can limit the owner’s freedom to use the property for other purposes.

Zoning Restrictions: These are set by local authorities to control the use of land for specific purposes, like residential, commercial, agricultural, or industrial use. These restrictions limit the type of developments or activities that can be carried out on the property. For instance, a residential zoning restriction would prevent the owner of a property for commercial purposes, or for the development of multi-dweller structures.

Building Restrictions and Covenants: These are often placed by residents’ associations, developers, or local governments to control the type, size, and style of buildings that can be constructed on the property. The owner may be restricted from constructing certain types of buildings, altering the property, or making modifications that do not conform to the set guidelines. Violating these restrictions can lead to fines or legal action.

Environmental Conservation Restriction: Cautions Caveats & Restrictions may be imposed by environmental agencies to protect sensitive ecological areas, water bodies, or natural resources. It restricts certain uses of the property, such as prohibiting deforestation, mining, or construction in protected zones. These restrictions help maintain environmental integrity and prevent actions that could harm the ecosystem.

Probate and Succession Restriction: Cautions Caveats & Restrictions may be imposed by courts in succession matters, this restriction ensures that property cannot be transferred or sold until inheritance disputes are resolved. The property remains frozen and cannot be transacted upon until the court grants permission. This is often to protect heirs’ interests and to ensure compliance with inheritance laws.

Right of First Refusal: Sometimes, an agreement may give a specific individual or entity the first right to purchase the property if the owner decides to sell. The owner must offer the property to the designated party first before considering offers from other buyers. This limits the owner’s flexibility in selling the property.

Private Settlements: There may be occasions when Cautions Caveats & Restrictions may be sought owing to private settlements in which the parties in the agreement (settlement) want to secure their different interests. This could be on account of pending legal outcomes or some other legitimate reason, for example where the property is the subject of probate but the beneficiaries have a buyer in hand who wants to commit to acquire the property pending the conclusion of probate.

Client Question: Can a Lease Function as a Form of Restriction?

While the purpose of lease registration isn’t to restrict the property, a lease can indeed function as a form of restriction on a property. Leases work as a restriction in the following way:

• Registering a lease formally records the lessee’s (tenant’s) rights to occupy and use the property for a specified term, under agreed-upon conditions.
• The lease agreement outlines the conditions and limitations on how both the lessee and lessor (property owner) can use the property during the lease period.
• A Registered Lease Limits the Owner’s Rights: The property owner cannot use, sell, or develop the property in ways that would interfere with the tenant’s rights as specified in the lease. For example, an owner cannot evict the tenant or make substantial changes to the property without adhering to the lease terms.
• If the property is sold during the lease term, the new owner inherits the lease and must respect the tenant’s rights until the lease expires. This limits the buyer’s immediate control over the property.
• By registering the lease, it becomes a public record, notifying any prospective buyers or interested parties of the existing tenant’s rights, thereby deterring unauthorized transactions that might disrupt the lease.

Although the primary intent of a lease is to grant occupancy rights, it does restrict the owner’s full control and limits the actions they can take with the property until the lease term ends.

It affects the marketability of the property, as prospective buyers are informed that they may have to honour the existing lease, which could influence their decision.

A lease is not necessarily aimed at preventing unauthorized sales or claims; it’s more about granting use rights and limiting ownership control temporarily.

Conclusion

As a prospective buyer, lender, and stakeholder in property, understanding these mechanisms is crucial not just for informed decisions, but also for understanding how to deal with the market in a secure manner.