Discharge of Charge of property in Kenya

Discharge of Charge of property in Kenya

If you had charged your property in Kenya when taking a loan or a mortgage, you will require to do a Discharge of Charge and register it with the Registrar of Lands.

A Discharge of Charge in Kenya is a crucial legal process that signifies the removal of a mortgage or charge from a property’s title. This process is essential when a borrower fully repays their loan, allowing them to regain complete ownership of the property.

What is a Charge?

A charge is a legal instrument registered against a property to secure a loan or debt. It grants the lender an interest in the property, which serves as collateral. The charge remains in place until the borrower meets all financial obligations, after which the lender must facilitate its discharge.

Understanding Discharge of Charge

A Discharge of Charge refers to the formal process of removing the lender’s interest from the property register. This is done by preparing and registering a Discharge of Charge document with the relevant land registry. Upon completion, the property owner holds an unencumbered title, free from any lender’s claim.

Why is a Discharge of Charge Important?

1. Full Ownership Restoration – It confirms that the loan has been fully repaid, allowing the owner full control over their property.
2. Facilitates Property Transactions – A discharged property can be sold, transferred, or used as collateral for another loan.
3. Prevents Legal Disputes – Failure to discharge a charge can result in disputes when proving property ownership.

Process of Discharge of Charge in Kenya

The process of discharging a charge involves several legal and procedural steps:

1. Loan Settlement

Before initiating a discharge, the borrower must clear all outstanding amounts, including any penalties or fees related to the mortgage or charge. Upon settlement, the lender confirms that the loan has been fully repaid.

2. Preparation of the Discharge of Charge Document

The lender (usually a bank or financial institution) prepares a Discharge of Charge document. This legal document states that the lender no longer holds an interest in the property. It must be executed by the lender and witnessed by an advocate or authorized signatory.

3. Execution and Stamping

Once the Discharge of Charge document is signed, it must be stamped by the Kenya Revenue Authority (KRA). The stamp duty payable depends on the property’s value and the financial institution involved.

4. Lodging the Document with the Lands Registry

The property owner (or their advocate) submits the stamped Discharge of Charge document to the relevant Lands Registry where the property is registered. The required documents include:

• The original title deed
• The executed and stamped Discharge of Charge document
• A duly filled application form
• Proof of identity (copies of ID, PIN certificate, and relevant company documents if applicable)

5. Registration of the Discharge of Charge

Once lodged, the Lands Registry verifies and records the discharge. The process may take several weeks, depending on the efficiency of the registry. Upon completion, the charge is removed from the title deed, and the property is deemed free of encumbrances.

6. Collection of the Updated Title Deed

The final step involves collecting the updated title deed, which reflects that the charge has been discharged. This confirms that the property owner now has full ownership without any lender’s claim.

Legal Provisions on Discharge of Charge in Kenya

The Land Act, 2012, governs the discharge of charge process, and the Land Registration Act, 2012. These laws outline lenders’ and borrowers’ rights and responsibilities and ensure the proper registration of land interests.

Common Challenges in Discharging a Charge

1. Delays at the Lands Registry – The registration process can take longer due to backlog or bureaucratic inefficiencies.
2. Lost Title Deeds – If the original title deed is misplaced, the property owner must first apply for a replacement, which extends the process.
3. Uncooperative Lenders – Some lenders delay issuing discharge documents, especially if there are unresolved financial matters.
4. Incorrect Documentation – Errors in paperwork can lead to rejection by the Lands Registry, necessitating corrections and resubmission.