Land sale agreement in Kenya

Land sale agreement in Kenya

A land sale agreement in Kenya is a legally binding document that outlines the terms and conditions for the sale of property between two parties. It serves to protect the interests of both the purchaser and the vendor, ensuring the transaction proceeds smoothly.

The sale agreement specifies the terms of the property sale, including the sale price and the date of full payment. As a crucial document in property transactions, it lays the foundation for the sale deed, ensuring that both parties fully understand and comply with the agreed terms.

What is a Sale Agreement in land transactions in Kenya?

In Kenya, purchasing land requires several essential steps, with due diligence being paramount. This process includes a physical site visit, conducting a land search, and a company search if the land is being bought from a registered company.

Once due diligence is completed, the price and other terms are negotiated, forming a contract enforceable by law—this is where a sale agreement comes into play. The agreement is typically prepared by the vendor’s advocate, who verifies the vendor’s legal capacity to sell.

A sale agreement for land includes the particulars of sale, such as a detailed description of the land and the nature of the estate (freehold or leasehold). Inaccurate descriptions may entitle the buyer to rescind the contract and seek a refund of any deposit paid.

If any chattels (movable property) are included in the sale, they should be itemized in a separate annexure attached to the contract.

Importance of a Sale Agreement

A sale agreement protects both the buyer and seller, ensuring their rights and interests are upheld throughout the transaction. Should either party fail to honor the contract, the other party can take legal action to recover damages.

The Law of Contract in Kenya requires written agreements for land transactions, making the sale agreement legally binding and enforceable. Without a written agreement, it would be challenging to prove the existence of the sale in a court of law.

Key Elements of a Land Sale Agreement in Kenya

A land sale agreement should include the following:

1. Identity of Buyer and Seller: Full names, identity card numbers, phone numbers, and addresses.
2. Purchase Price: The agreed amount, payment terms (cash or installment), and payment timeline.
3. Property Description: Size, title number, location, and condition of the land.
4. Cost Distribution: Outlining who is responsible for various costs, such as stamp duty, legal fees, and title transfer costs.
5. Obligations: Clear roles and responsibilities for both buyer and seller.
6. Breach Remedies: Steps to be taken if either party defaults on the agreement.

Validity Requirements for a Sale Agreement of land in Kenya

For a sale agreement to be legally valid, it must:

• Confirm the vendor’s capacity to sell.
• Specify the sale price.
• State the deposit amount (usually 10% of the purchase price) and whether it will be held by the vendor’s advocate.
• Outline the completion date for the transfer of documents and payment of the balance.
• Stipulate the payment method (banker’s cheque or professional undertaking).
• Include interest terms for any delayed payments.
• Incorporate the Law Society Conditions of Sale (1989), unless otherwise agreed.

Completion of Sale of Land in Kenya

The sale agreement should specify the completion documents, including:

• Original title documents.
• Transfer documents signed by the vendor.
• Land Rent and Rates Clearance Certificates (for leasehold and urban properties).
• Relevant consents, such as those from the Commissioner of Lands, Land Control Board, and any mortgagee.
• Withdrawal of caveats or cautions if applicable.
• Proof of payment for land rent and rates.
• Vendor’s PIN and identification documents.

Special Conditions in a Sale Agreement

Key conditions may include:

• Vendor’s capacity.
• Deposit payment.
• Interest on unpaid purchase price.
• Payment for chattels.
• Completion date.
• Risk and liability for insurance before completion.
• Power to rescind the contract or serve a completion notice.

Common Clauses in Sale Agreements in Kenya

• Date and parties involved.
• Property recital.
• Definitions and interpretations.
• Law Society Conditions of Sale (1989).
• Purchase price and deposit.
• Interest on late payment.
• Completion details.
• Special conditions.
• Stamp duty and related costs.
• Guarantee of title.
• Arbitration and termination provisions.

Would you like to purchase or sell land in Kenya? Do not hesitate to contact us on info@swkadvocates.com