Acquisition of assets is one of the main signs of growth and investments into your future. Real estate investment is the purchase of a future income stream from property and can offer several advantages over other types of investments. These include;
• Potentially higher returns,
• Inflation hedging (Investments in real estate is not finite on purchases of Property
• and diversification.
Once you have decided on Real estate as one of your investments, We, at Igeria & Ngugi Advocates will gladly walk you through the process of purchasing property and any other matters that may arise from the said acquisition.
Here are the 9 major steps of Acquisition of Property:
1. Searches and Inspection of the Title
Once you identify land it’s always recommended that you visit the lands registry so as to conduct a search of the land in question. You will need a copy of the land title deed from the seller to enable the search. This will normally take three days to get the results of the current registered owner of the land and if there is any encumbrance (third-party rights) entered against the land.
2. Preparation of Offers and Price Negotiation
Once you are satisfied with the search results as presented by your Advocates from the lands registry and the company registry (where a company is involved), then you can have the Vendor’s Advocate prepare an offer for your consideration. The letter of offer/letter of intent contains the basic terms of the agreement between the Parties including;
2.1 the details of the seller and purchaser;
2.2 the description of the property on offer;
2.3 the proposed purchase price and modes of payment; and
2.4 any other special term that informed the Agreement between the Parties.
The Letter of Offer/ Letter of Intent is executed by both Parties and it is drafted subject to contract (meaning that it is subject to the Parties execution the Agreement for Sale). It is therefore worth noting that the Letter of Offer/ Letter of Intent comes with an allowable period for execution of the Agreement for Sale. Therefore, if parties fail to execute the Agreement for Sale over the grace period, the Offer lapses.
3. Sale Agreement and Deposit Payment
The Agreement for Sale, as a matter of legal practice, is drafted by the seller’s advocate and presented to the buyer’s advocate for approval. It is important to understand that an Agreement for Sale is created based on the Parties’ agreement as to its commercial terms. However, as a matter of practise, once the agreement has been executed, the agreed deposit is paid by the purchaser through their advocate to the seller’s advocate’s account to hold as stakeholder pending the registration of the Property in favour of the Purchaser.
4. Payment of Land Rates and Land Rent over Property
Buyers should confirm whether the Property they intend to purchase have been assessed for land rates (payable to the county government) and/or land rent (payable to the lands offices). The settlement of the land rates and land rent is a legal obligation of landowners and the seller should clear any pending rent and rates and provide their respective clearance certificates. Of note, the parties apportion the settlement of the land rates and land rent between themselves as at the date of completion.
5. Completion Documents
The Purchaser’s Advocate prepares transfer documents that will be executed by both the buyer and the seller, subject to review by the seller’s Advocate. In turn, the seller’s Advocate is responsible for providing all the Completion Documents necessary to transfer the Property to the Purchaser.
6. Exchange of Documents
Upon receipt of the completion documents from the seller, the buyer is obligated in exchange of the documents, to pay to the seller’s advocates the entire balance. The amount is held as stakeholder pending the successful registration of the Property in favour of the Purchaser.
With respect to the stamp duty payable, an application for valuation is always made to the government valuer, who makes a site visit to enable him or her to prepare the requisite valuation report.
The payable duty is determined by a government valuer and the valuation is done to determine the value of the land on the open market as at the date of Transfer.
8. Payment of Stamp Duty
It is the responsibility of the buyer to pay the stamp duty subject to the assessment and finding of the Government Valuer.
9. Registration of the Transfer
Once the Stamp Duty is settled, the Completion Documents are booked for registration at the Lands Office. At the completion of this process, the legal and beneficial ownership of the land shall have changed hands to the intended beneficiary. At this point, the seller’s Advocate is free to release to the seller the full purchase price amount that was being held on a stakeholder basis. In exchange of release of the purchase price, the purchaser is given vacant possession over the Property.
Our Property and Real Estate team are always available to assist in all these seemingly daunting steps.
With so many fraudulent cases arising, it is only prudent that you get an Advocate involved from the onset.
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