Land Due diligence involves a thorough investigation of a property. Its goal is to identify the actual owner of the land to be purchased, the actual size of the land, and any issues on it. It also checks if the ownership documents are legal before entering a sale agreement.
It is essential to carry out all the due diligence processes to ascertain the land status for the purchaser’s safety and enhance a successful land purchase.
The processes of due diligence are as follows:
1. Official Search at the Land Registry
To search, the purchaser has to visit the nearest land registry to the land being purchased. The search at the land registry establishes details about the land’s real owner, the actual size of the land, the land boundaries, any charges or caveats, and any other information affecting the purchase.
While visiting the land registry, one should carry;
i. Title deed
ii. Seller KRA PIN certificate
iii. Seller National ID
During the land due diligence process, one must fill out form 26 and attach the documents, attach a copy of the title deed, National ID, and the KRA pin, and finally submit the form and await results.
The land due diligence process would take a few days, depending on the specific registries and the workload, but it should be within one week. search will contain the following results;
1. Particulars of the lawful owner of the land.
2. Any encumbrances over the land, e.g. any charges on the land, caveats, or restrictions on the title deed.
This information guides the purchaser on whether or not to proceed with the land transactions.
2. Search at the county registry
After the purchaser has confirmed the status at the land registry, the purchaser must confirm the records from the county registry at the county government. The purchaser is then given information, including whether or not the land rates have been paid and the registered user of the land.
This happens when the land has been registered under a municipality where a party is required to pay for land rates.
3. Rates
The purchaser must clear all the unpaid rates and obtain a rate clearance certificate.
4. Review of Caveats and Other Restrictions
During the land due diligence process, the purchaser must know the nature of the caveat and the restriction placed on the title deed. If the charges are cleared, the purchaser should request the legal removal of the restrictions before buying the land.
However, there are overriding interests that are unregistered, but the purchaser is obliged to be aware of them, and the interests include;
a. Rights of way
b. The Matrimonial property law gives spousal rights. The purchaser must get both spouses’ consent before buying a matrimonial property. This consent must be in the form of an affidavit.
c. Natural rights
d. Trusts, including customary rights and any other rights governing the property.
5. Registry of Person Verification
The registry of persons can assure that the owner of the land is the registered owner of the land and also the original user of the land. This helps to avoid fraudulent transactions and legalise the purchase of the land.
Physical Site Visit and Boundary Verification
The physical visit approves the existence of the land being purchased; it also affirms the actual size of the land to prevent any boundary disputes with neighbors.
The purchaser can involve a surveyor during the physical visit when conducting land due diligence. The surveyor will confirm that the land boundaries are accurately marked with land beacons. They will also help to consider factors like:
- nearness to social amenities
- soil texture
- geography
- whether the demarcation beacons are in place.
Review of the Legal Documentation
Before buying land, one should involve a legal expert. They will review all purchase documents, like the land title deed, the green card, and the survey plans. The lawyer also helps draft a sale agreement. It protects both parties and includes all necessary clauses.
Financial Management and Considerations
The purchaser should assess the property’s market value. Compare it to the prices of the same land. Also, analyze the potential profit from it.
The purchaser should also be financially prepared for transactions like legal and registration fees. One can also consult an insurance company for the coverage of what the purchaser may need, especially with the payment of land.
Conclusion
Due diligence is vital. It prevents fraud by sellers claiming to be the land’s registered owners. This process must be done before any transaction. It ensures land deals will succeed. So, it is vital to invest time and effort in due diligence. This means following all relevant laws and regulations. Come meet us as we secure your future with us.
