Due diligence refers to the process of investigating and verifying all material aspects of land before its purchase. It involves confirming ownership, identifying any legal or physical defects affecting the land, and ensuring compliance with all applicable laws and regulations. The primary objective of due diligence is to ensure that a purchaser acquires a valid and marketable title free from undisclosed encumbrances or disputes.
This article highlights some of the key steps involved in conducting due diligence before purchasing land.
Official Searches
The first step in any land transaction should be the conduct of an official search at the relevant land registry. The seller ordinarily provides the purchaser with a copy of the title deed, upon which the purchaser may apply for a search either electronically through the Ardhi Sasa platform or physically at the relevant land registry where the property is situated.
A Certificate of Official Search typically reveals:
- The property details and nature of ownership;
- The name of the registered proprietor;
- Any encumbrances affecting the land, including charges, cautions, caveats, restrictions, easements, and license’s; and
This information enables a purchaser to confirm the ownership status of the property and determine whether it is subject to any interests that may affect its value or transferability.
However, an official search alone may not be sufficient. In certain circumstances, it is prudent to conduct a historical search to establish the chain of ownership and ascertain whether the property was lawfully acquired and transferred over time.
In the landmark case of Dina Management Limited v County Government of Mombasa, the Supreme Court emphasized that a purchaser is expected to undertake sufficient due diligence, including examining the history of the title where circumstances so require. The Court observed that the legality of the process through which land was initially allocated and subsequently transferred may affect the validity of the current title. Failure to conduct adequate investigations may expose a purchaser to the risk of acquiring a defective title.
Registry Searches
In addition to an official search at the land registry, other searches may be necessary depending on the circumstances of the transaction.
Where the registered proprietor is a company, a search should be conducted at the relevant company registry to verify ownership, existence of encumbrances, and authority to dispose of the property.
Similarly, where there is reason to suspect that the property may be the subject of succession proceedings or family disputes, searches should be conducted at the relevant court registries to establish whether there are any pending cases or orders affecting the property.
Requisitions on Title
Requisitions on title are formal inquiries raised by a purchaser or the purchaser’s advocate seeking clarification on matters relating to the property’s Title.
Such requisitions may concern:
- The description and boundaries of the property;
- Inconsistencies in the proprietor’s names
- The acreage of the land;
The responses provided by the seller assist the purchaser in identifying and addressing any concerns before completion of the transaction.
Inspection of the Property
A physical inspection of the property is an essential component of due diligence. A site visit allows the purchaser to verify the existence and location of the land, assess its physical condition, and determine whether there are any developments or structures erected on it.
The inspection also assists in identifying any persons in occupation or possession of the property and provides an opportunity to engage with neighbors and local residents. Such interactions may reveal information regarding boundary disputes, competing claims, historical ownership issues, or other matters that may not be apparent from official records.
Conclusion
Due diligence is a critical safeguard in land transactions. While an official search is an important starting point, a prudent purchaser should undertake comprehensive investigations, including historical searches, registry searches, requisitions on title, and physical inspections of the property. Conducting thorough due diligence minimizes the risk of fraud, defective titles, and costly disputes, thereby ensuring that the purchaser acquires a secure and marketable interest in the property.
