CRUCIAL CLAUSES THAT MUST BE INCLUDED IN A LEASE AGREEMENT

They Include:

1.      NAMES OF THE PARTIES

• These are the names of the people who are entering into a contract together.

2.      CONTRACT PERIOD

• The period shall be the time of which the contract commences and ends.

3.      TERMINATION

• Termination of a contract could be due to breach or lapse of contract period.

4.      BREACH OF CONTRACT

• A breach of is the violation of a contractual obligation (dishonouring the contract terms)

5.      RENTAL AND ITS ADJUSTMENTS THEREOF

• Parties to the agreement shall agree on the amount the tenant shall pay as rental monthly as well as agree to the rules for its adjustment.

6.      USE RIGHTS, RESPONSIBILITIES AND POSESSION OF THE PROPERTY

• This describes the extent to which a tenant may use and enjoy the property as well as detailing how the landlord may not disturb the occupancy and enjoyment of such property by the tenant.

7.      MAINTENANCE AND REPAIRS

• This clause shall describe who is responsible for the maintenance of the property depending on the type of maintenance required.

8.      DISPUTE RESOLUTION

•  Parties to a contract shall set out to describe in detail as to how they will resolve any disputes if and when they arise.

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SECURITIES REGISTERABLE AT THE COMPANIES REGISTRY - KENYA LAW

Introduction

The principal or commonly prepared securities that require registration at the Companies registry are the Debenture and Chattels Mortgage.

1.    Debenture

The Companies Act (Cap 486) of the laws of Kenya provides the legal regime for the registration of debentures and the issuance of a Certificate as evidence of the said registration. 

The issuing of a debenture by a company is done pursuant to powers conferred to the company by its Memorandum and Articles of Association. In practice in addition to the said powers a resolution by the Board of Directors of the company allowing creation of the debenture will be prepared and executed by the directors of the company.

The procedure for registering a debenture is as follows: -

a.     Conducting of a search on the company file at the Companies Registry to ascertain the existence of the company together with information that is pertinent to the creation of a debenture such as establishing that the provisions of the Memorandum and Articles of Association of the company empower it to create a debenture.

b.     Drawing up of the Instrument of debenture

c.     Execution of the debenture. The Companies Act provides for execution of the debenture by appending of the company seal which is to be witnessed by the signatures of two directors of the company or one director of the company and its company secretary. Execution of the debenture by the financier is not a mandatory requirement

d.     Assessment of Debenture to stamp duty and payment of assessed stamp duty. Assessment of a debenture to determine the stamp duty payable to the Kenya Revenue Authority is done at the Companies Registry. Presently stamp duty payable has been lowered from 0.2% to 0.1% of the sum secured. This change came into effect following the budget speech read in June 2010.  In order to assess a document to stamp duty there is need to have the Personal Identification Numbers (PINs) of the parties to the transaction (in the case of a debenture the PIN of the lender and the borrower). A PIN is issued by the Kenya Revenue Authority. After assessment of payable duty payment of the tax is made at specified banks which remit details of the payment to the Companies Registry to facilitate the stamping of the debenture instrument.

e.     Lodging of the debenture with the Registrar of Companies for stamping.  The Instrument of Debenture is then presented at the registry where an endorsement is made on its first page signifying the payment of duty. 

f.      Lodging the debenture at the Companies Registry for registration upon making payment, usually a standard fee.

g.     Issuance of a certificate as evidence of the creation of a debenture.

 

2.    Chattels Mortgage

The creation of Chattels Mortgage is governed by the Chattels Transfer Act (Cap 28) of the Laws of Kenya. The creation of Chattels Mortgages in Kenya is largely restricted to securities owned by individuals. In this regard, companies are considered to be adequately served by securities arising from debentures and other forms of Charges provided for in the Companies Act.  

Registration procedure for a Chattel Mortgage:

a.     Where the chattels over which a chattels mortgage is created are registered at a public registry such as is the case with motor vehicles then prior to the preparation of a Chattels Mortgage a search relating to the asset is conducted at the relevant registry to ascertain its existence and other pertinent matters that may affect the security. 

b.     Drawing up and execution of the Chattels Mortgage instrument.

c.     Assessment of the Chattels Mortgage to stamp duty and payment of assessed stamp duty. Presently stamp duty payable has been lowered from 0.2% to 0.1% of sum secured. 

d.     Lodging of the Chattels Mortgage with the Registrar of Companies for stamping.

e.     Lodging of the Chattels Mortgage at the Companies registry for registration upon payment of a standard fee.

DUPLICITY OF CHARGES

 

It is a legal requirement that a charge should not suffer from duplicity. Duplicity occurs where the charge or count charges the accused of having committed two or more separate offences, It is said to new duplex and barred for duplicity. Duplicity occurs when a statute creates offences in the alternative, Section 86 of the Traffic Act illiterates for offences created in the alternative e.g. causing death by driving a motor vehicle:

a.             driving recklessly;

b.             driving at high speed.

c.             Driving in a manner dangerous to the public.

d.             Leaving the motor vehicle on the road in a manner dangerous to the public.

All these are stated in the alternative so that you cannot be charged of two or more but only one of the alternative.

A count charging the accused of causing death by driving the motor vehicle recklessly and at high speed is duplex. The charges should be expressed in the alternative:

Mwambalafu v R (1966) EA 459

The appellant was charged with the alternative counts of an offence i.e. the offence of arson and attempted murder. The particulars of the charge o arson alleged that the appellant had set on fire two houses, one belonging to A and the other belonging to B The houses stood more than 100 yards apart.

He was charged with one count of murder and one count of arson. The particulars stated that he attempted to cause the death of A and his wife by setting on fire 2 house one A’s and the other B’s. Evidence showed that the appellant  had attempted murder on 2 occasions. The first , he burnt A’s house and when A took refuge in B’s house, he burnt B’s house as well. The question was whether there was duplicity.

It was found that yes there was, with respect to the arson charge as there were two offences arising from 2 acts of arson. Secondly, there was also duplicity with respect to the attempted murder hence there ought to have been two charges off attempted murder. Thirdly, the attempted murder counts should be framed in the alternative. There ought to be 4 counts and not 2 but the e second attempted murder count should be in the alternative.

Saina v R (1974) EA 83

The appellant was charged on a single count with the offence of housebreaking, theft and handling stolen property. He was convicted but on appeal the High Court found the charge barred for duplicity. It was found that one count charged 3 separate offences i.e. shop breaking contrary to section 306(a) of the penal code, handling stolen goods contrary to section 322 of the penal code. It was forth held that each offence should be set out in a different count. The charge of handling stolen property is in the alternative. The appellant was charged.

Bhatt v R (1960)

The appellant was charged with being in possession of obscene material, contrary to section 181(a) of the penal code.

It was alleged that the appellant for the purpose of or by way of trade for the purpose of distribution or public exhibition had in his possession 37 photographs of an obscene nature which could tend to corrupt the morals of any person etc. Section 181 talks of alternative purposes.

It was held that (on appeal) the particular motive why the appellant has the photos should have been averred to the purposes. It 2as wrong for the charge to refer to many purposes. The averment of several purposes made the charge barred for duplicity. Each of the several particular set out in the charge constituted a separate offence. Charging the accused in this mannered prejudices his defense.

Koti v R (1962) EA 439

Appellant was charged and convicted of wrongfully attempting to interfere or influence witnesses in a judicial proceeding either before or after they had given evidence contrary to section 2121(1) of the penal code. On appeal, it was held that the charge was duplex, i.e. it charged with two offences i.e. interfering with the  witness before and after. They should state if it was before or after. If it was before and after there should be 32 counts. Duplicity is allowed in certain circumstances. There are exceptions to the general rule that count should not charge an accused with more than one offence.

Exceptions to the General Rule

1.      Where the form of preferring a charge is allowed by statute. The second schedule of the CPC authorizes charging of 2 offences in one count in respect of:

a.             The offence created under section 330 of the Penal ode in respect of false accounting;

b.             Second schedule authorizes offences creates under the section 304 and section 379 i.e. burglary and stealing. Form 9, in the second schedule.

Pope v R (1960) EA 132

Accused was charged with fraudulent accounting false accounting contrary to section 330(a) of the penal code.

2.             Where the sepaarate offences are charged conjunctively using the word and as opposed to or if the matter relates to one act. In Gichinga v R  the appellant was charged with driving a car recklessly. In the particulars, it was stated that he drove in a reckless manner and at a speed which was dangerous to the public having regard to all the circumstances of the case contrary to section 86 of the Traffic Act. The Act employs OR rather than AND. The magistrate acquitted the accused because of duplicity as it alleges the commission of two offences. On revision  by the high court it was held that the charge was not duplex and it had been expressed conjunctively and it referred to one incident or act i.e. appellants manner of driving at the relevant time. If it had been expressed using the disjunctive OR. In a. reckless manner or at a high speed it would have been duplex

EFFECTS OF DUPLICITY

The law is not clear. There are two opposing views:

1.      One view holds that duplicity is an incurable defect which can be cured by amending the charge hence if found to be duplex, the accused should be discharged. This was seen in Cherere Gukuli v R (1955) 22 EACA 478 and followed in Saina v R. Those  who subscribe to this position hold that a count which charges for two counts is barred for duplicity and a conviction based on it can not stand. 

2.      The other view holds that the true test should be whether injustice or prejudice has been occasioned on the accused by the duplicity so that where the accused suffers no prejudice, a conviction o duplicity should not stand. This school relies on section 382 CPC which provides for finding of a sentence or order issued by  a court should be reversed or altered on appeal or revision on account of error omission or irregularity in the charge unless the error omission or irregularity has occasioned a failure of justice. This school of thought was followed in:

a.             Kababi v R (1980) KLR 95. The appellants was charged in a single count with causing the dearth of 3 persons by dangerous diving. He was convicted. He appealed, challenged the decision of the court that it was based on a barred charge. It was held that the failure to charge or to file 3 separate counts did not occasion injustice though there was duplicity. The conviction was upheld.

b.             Koti v R: Appellate court found the charge was duplex but declined to interfere because it did not occasion any in justice. It was held that the test in deciding whether a failure of justice occurred or the accused has been prejudiced in his trial.

c.             Mwambalafu v R : the appellate court found that the arson charge was duplex but that it did not occasion any injustice. The court relied on section 382 of the Tanzania CPC.

d.             Mwangi v R: The appellate court found that the charge was duplex but that it had occasioned no injustice.

 

What is Capital Gains Tax (CGT)?

CGT is tax that is levied on:–

Gains which accrued to a company, an individual or partnership on or after 1st January 2015 on transfer of property situated in Kenya, acquired on or before January 2015.

Gains arising from the sale of shares or comparable interests in foreign entities which derive more than 20% of their value directly or indirectly from immovable property situated in Kenya to CGT in Kenya. (effective 1st July 2023)

Similarly, CGT will also apply where a non-resident person who holds more than 20% of the share capital of a Kenyan company directly or indirectly disposes off their interest. (effective 1st July 2023)

 

What is the Tax Point?

CGT is charged at the point of transfer of property. This is upon registration of the transfer instrument in favour of the transferee indicating transfer of interest in the property from the seller to the purchaser.

CGT is declared and paid by the transferor of the property.

Rate of Tax

The rate of tax is 15% of the net gain.

It is a final tax i.e. the Capital Gain is not subject to further taxation after payment of the 15% rate of tax.

Net Gain is Sales Proceeds minus the Acquisition and Incidental cost

CGT is on gains arising from sale of property.

How to Compute Capital Gains Tax

Net Gain = (Transfer value - Incidental Costs on Transfer) - Adjusted Cost ( Acquisition Cost + Incidental Costs on Acquisition + Any enhancement Cost)

What constitutes a transfer?

If property is sold, exchanged, conveyed or otherwise disposed of in any manner (including by way of gift), whether or not for consideration;

On the occasion of the loss, destruction or extinction of property whether or not a sum by way of compensation is received in respect of the loss, destruction or extinction unless that sum is utilized to reinstate the property in essentially the same form and in the same place within one year or within a longer period of the time approved by the Commissioner.

On the abandonment, surrender, cancellation or forfeiture of, or the expiration of substantially all rights to property, including the surrender of shares or debentures on the dissolution of a company

Some allowable expenses for the purposes of CGT include;

a)     Cost of Acquisition/Construction

b)     Loan/Mortgage interest

c)     Cost of advertising to find a buyer

d)     Costs incurred in valuation of the property

e)     Legal fees

f)      Costs of enhancements.

How To Determine the Transfer Value/Selling Prices for the purpose of CGT

Amount received for transferring the property; Sums received in return for the abandonment, forfeiture or surrender of the property.

Amount received for the use of exploitation of the property eg rent

Compensation received for damage , injury to the property or for the loss of the property

Insurance policy reimbursement in respect of injury, or loss or damage to the property.

Exemptions on Capital Gains Tax

Income that is taxed elsewhere as in the case of property dealers

Issuance by a company of its own shares and debentures

Transfer of property for the purpose only of securing a debt or a loan

Transfer by a creditor for the purpose only of returning property used as security for a debt or a loan

Transfer by a personal representative of any property to a person as beneficiary in the course of the administration of the estate of a deceased person.

Transfer of assets between spouses;

Transfer of assets between former spouses as part of a divorce settlement or a bona fide separation agreement;

Transfer of assets to immediate family;

To a company where spouses or a spouse and immediate family hold 100% shareholding;

A private residence if the individual owner has occupied the residence continuously for the three-year period immediately prior to the transfer concerned

Transfer of property as a result of internal restructuring within a group which has existed for at least 24 months, and which does not involve a transfer of property to a third party.

How do I pay for Capital Gains Tax?

The due date for CGT payment shall be the earlier of receipt of full purchase price by the vendor or the registration of the transfer instrument in favor of the transferee.

·        -Payment should be initiated online (TBA)

·        -The modes of payment include cash, cheque or RTGS.

·        -After initiating payment, you will receive a payment slip.

·        -Present the payment slip at any KRA appointed bank with the due tax to complete payment.

 

Review: The Applicable Land Laws in Kenya

 

Introduction

The issue of land, its ownership, use and management is a highly emotive one in Kenya and was one of the key issues that drove the need for a new constitution. Following lengthy deliberations and a comprehensive public participation process, a new constitution (the "Constitution") was promulgated on 27 August 2010. The Constitution sets out principles governing land and also requires all laws relating to land to be revised, consolidated and rationalised within certain timelines.
"….it is a very difficult exercise; a very difficult undertaking", said Hon. James Orengo, Minister for Lands, in Parliament, following the passing of a new suite of land legislation to implement the principles governing land set out in the Constitution.
Parliament passed three bills related to land on 25th and 26th of April 2012. The President assented to the bills immediately and the new land laws became effective on 2nd May 2012. The new land laws are:
The National Land Commission Act, 2012;
The Land Registration Act, 2012; and
The Land Act, 2012.
Some laws repealed - not all
The new laws have repealed the following statutes:
The Indian Transfer of Property Act;
The Government Lands Act;
The Registration of Titles Act;
The Land Titles Act;
The Registered Land Act;
The Wayleaves Act; and
The Land Acquisition Act.
The following are some of the laws that have not been repealed:
The Land Control Act;
The Landlord and Tenant (Hotels, Shops and Catering Establishments) Act;
The Sectional Properties Act; and
The Distress for Rent Act.
The new laws require all existing laws relating to land that have not been repealed, to be applied with the necessary alterations and adaptations to give effect to the new laws. However, in the absence of formal amendments to the existing laws that have not been repealed, the altering and adapting of these laws in order to give effect to the new laws is likely to cause some inconsistency in the practical application of the law.
Key Highlights of the New Land Laws
1. Land Administration
The administrative structures for management of land in Kenya have been changed. The National Land Commission (the "Commission") will have wide powers in the management and administration of public, private and community land.
The chairperson and members of the Commission will be identified through a public, transparent and competitive selection process and ultimately approved by Parliament. This process was to commence within 14 days of the coming into effect of the new laws, which was 16 May 2012.
In order to carry out its functions effectively, the Commission is required to devolve the administration of land. Consequently the Commission is required to establish offices and land management boards at the county level. In the interim, employees of the Ministry of Lands in departments whose functions have been moved to the Commission are required to continue performing their services as if they were employees of the Commission. In due course, they will be required to re-apply for their jobs and undergo a vetting process to ensure their suitability to serve on the Commission.
2. Public Land
The allocation of public land to private individuals has been a concern for many Kenyans for a long time. Allocation of public land was within the control of public officers at the Ministry of Lands, who were susceptible to influence by the executive arm of the Government. The process of allocation of public land was therefore shrouded in secrecy and often, members of the public would only realize that public land has been expropriated, after a title deed has been issued to private persons.
Allocation of public land to private persons will now be managed and supervised by the Commission. This creates independence in the allocation process as the executive arm of the Government will no longer have control of the process. In addition, land available for allocation will now be Gazetted and notices published in at least two local dailies, prior to commencement of the allocation process. This will go a long way in creating transparency and public participation in the allocation process.
3. Community Land
The new laws require all land in Kenya, whether private, public or community land, to be registered. The new laws therefore make provision for the registration of community land. However, substantive provisions on the administration and management of community land will be enacted by 2015 as required by the Constitution.
4. Private Land
The new laws will have a significant impact on the administration and management of private land in Kenya and the rights of various interested parties.
Some of the key changes are as follows:
4.1. Title to land; transfer of land and connected matters
(a) What happens to existing title deeds?
Under the old land law, title deeds were issued under any one of the following statutes, which have now been repealed:
The Registered Land Act (RLA);
The Registration of Titles Act (RTA);
The Land Titles Act (LTA); and
The Government Lands Act (GLA)
Retained titles : Title deeds issued under the RLA and RTA continue to be valid notwithstanding the new laws. These are the most common title deeds in Kenya. In due course, the registrar will issue new title deeds in the new prescribed form.
Titles to be examined and registered afresh: Title deeds issued under the GLA and LTA on the other hand, will have to be examined and registered afresh under the new laws. There are no specific timelines prescribed for the examination and fresh registration, save that this has to be done 'as soon as conveniently possible' - as provided in the new laws. This does not mean that GLA and LTA title deeds invalid. However, they will only be recognized under the new laws after their examination and fresh registration.
The new laws are silent on whether holders of GLA and LTA title deeds will be allowed to transact with their title deeds, pending their examination and fresh registration. This appears not to be permitted and will almost certainly cause delays in ongoing transactions related to land held under such title deeds.
Some of the main characteristics of GLA and LTA title deeds are as follows:
GLA title deeds - most of them were issued prior to independence. They contain the words "Indenture", "Conveyance" or " Indenture of Conveyance" as part of their heading. They were mostly issued for land that was designated as 'farm land' prior to independence and shortly thereafter. Such land includes some parts of Central Province, Kericho and Nairobi, especially Karen. It is uncommon to find GLA title deeds for land in other parts of the country. A few exist though.
LTA title deeds - these were issued for land at the Coast and Lamu Island only.
(b) Pre-emption rights on expired grants
All land held on leasehold titles will revert to the Government on expiry of the term. However, where the immediate past owner of the land is a Kenyan citizen, the Commission is required to grant them the right to re-acquire the land, so long as the land is not required for public purposes.
Following the promulgation of the Constitution, foreigners who held freehold titles or leasehold titles that were for a term exceeding 99 years, had their titles reduced to 99 year leasehold titles. There has been debate on when the 99 year period is deemed to commence. One view was that the 99 year period commenced on the date the Constitution was promulgated (27 August 2010) and the other view was that the 99 year period commenced on the date the title was first granted. Unfortunately, the new laws do not provide further clarity on when the 99 year period commences.
(c) Certificates of lease to be issued over apartments, flats, townhouses, maisonettes and offices
Where a person is registered as the owner of a long term lease over apartments, flats, maisonettes, townhouses or offices, the registrar will now be required to issue them with a certificate of lease (title deed). The registrar is required to register such long term leases where the property comprised is properly geo referenced and approved by the Government's survey department. However, the processes and timelines for approval by the Government's survey department have not been defined.
(d) Transfer of a portion of land - new subdivisions to be registered first
Transfer of portions of land will only be completed upon undertaking a subdivision and a new register being opened for the new subdivisions. This means a new title deed for the subdivision will have to be obtained prior to completing the transfer of a portion of land.
A transfer is defined as, among other things, the passing of land from one person to another. Therefore, arguably, the passing of a long term lease from one person to another may be deemed to be a 'transfer'. It is therefore likely that the sale of a portion of land by way of a long term lease will be deemed to be a 'transfer of a portion of land' and therefore require subdivision. However, the requirement for subdivision will not apply where such land comprises of apartments, flats, townhouses, maisonettes and offices (which only require geo-referencing and approval by the Government's survey department, as opposed to subdivision).
(e) Spouse deemed ownership and requirement for spousal consent
"Are you married?"- This is a question that is likely to feature more in land transactions, following the passing of the new laws. The new land laws have created statutory rights to land for spouses. These rights affect all land and not just matrimonial property. These rights include:
Spouse deemed owner though not on title - where land is held in the name of one spouse, but the other spouse has contributed to the productivity, upkeep or improvement of the land, the contributing spouse shall be deemed to have acquired an ownership interest in the land. These ownership rights shall be recognized as if they were registered. Case law will hopefully interpret precisely what constitutes spouse contributions.
Sale or charge void, if spousal consent not obtained - Dispositions (including sale, transfer, lease and charges) of any land or a dwelling house held in the name of one spouse shall require the consent of the other spouse.
A lender or purchaser is now under a duty to inquire whether the consent of the other spouse or spouses has been obtained. If the spouse undertaking the disposition misleads the lender or purchaser or other transferee as the case may be, the sale, transfer, charge, lease or other disposition shall be void, at the option of the spouse who did not consent to the transaction.
The term 'spouse' has not been specifically defined in the new laws. However, its definition could be inferred from the definition of the term 'marriage', which has been defined as a "civil, customary or religious marriage". The lack of a specific definition of the term 'spouse' is likely to cause practical difficulties in determining whether or not spousal consent was obtained for a transaction. In addition, Kenyan law recognizes marriages that are currently not capable of registration (due to lack of a legislative framework), such as marriages under customary law. The existence of such marriages creates an opportunity for abuse of the new legal requirements.
(f) Evicting a purchaser in possession not as easy - statutory protections apply
It is not unusual in transactions for sale of land, for the seller to allow the purchaser to take possession of land prior to registration of the transfer, on terms agreed between the seller and the purchaser. This is especially the case where registration is delayed due to Government bureaucracy. The terms under which possession would be granted would include an agreement on circumstances when the seller would require the purchaser to vacate the premises, for example, if the transfer is not registered within a reasonable time.
Under the new laws, the terms upon which such a purchaser will take possession, will not only be regulated by what the parties have agreed, but also the provisions of the new law. Under the new law, when a purchaser takes possession of land prior to completion of the sale, the vendor can only regain possession peaceably (no resistance from purchaser) or through a court order. In addition, the purchaser is entitled to relief from court in certain circumstances.
This will almost certainly result in sellers refusing to permit any form of possession prior to completion.
(g) "Land Use Consent" may be required prior to effecting a transfer of land
An additional requirement before effecting a transfer of land is the consent of the county land management board (a branch of the Commission), as to the use of the land. Whilst it is not explicitly clear what this consent will contain, we presume it will contain a certificate to the effect that the land is being used in accordance with the designated user.
(h) Prejudicial sales of land by debtors to be set aside
The sale or transfer of land by an owner of land who owes money to any person may be restored for the benefit of unsecured creditors, where the owner of the land makes the sale or transfer in order to prejudice unsecured creditors. This will involve a court process. Such disposals of land will be deemed prejudicial if the seller will be unable to pay all their debts without recourse to the sold land and the disposal is intended to hinder or delay recourse to the land, by a creditor.
(i) Execution of documents by companies to be in the presence of an advocate
An additional requirement in terms of execution is that corporate bodies or associations effecting dispositions of land (such as agreements for sale, transfers and charges), will now be required to execute these documents in the presence of an advocate of the High Court of Kenya, a magistrate, judge or notary. Presumably, this means that for companies, in addition to having the usual two directors or a director and a company secretary witness the sealing of a document, an advocate, notary, judge or magistrate should witness the sealing of the document.
(j) Compulsory Acquisition - process now more just and fair
The process of compulsory acquisition of land is now more transparent and will be managed by the Commission. In addition, the process is more just and fair to the owner of land as the award of compensation (determination of amount payable) will be made prior to the Government taking possession of the land. The Commission is expected to promulgate rules to regulate the assessment of just compensation.
Where there is a dispute in the amount awarded, the Commission is required to place the compensation awarded in a special account, which will earn interest at prevailing bank interest rates, before taking possession of the land. This is a new requirement aimed at making the process of compulsory acquisition more just and fair.
(k) Land Sizes - a scientific study to be commissioned within one year
A scientific study to determine the economic viability of minimum and maximum land sizes will be commissioned within one year, which is by 01 May 2013. The findings of the study will be subjected to public comments and thereafter debated and if deemed fit, adopted by Parliament. Rules prescribing the minimum and maximum acreages, based solely on the report adopted by Parliament, will then be published by the Cabinet Secretary in charge of matters related to land.
(l) Government Fees - to be a percentage of value
Presently, save for stamp duty and exceptional matters such as annual rent which are based on the value of the land, fees payable to the Government for all matters related to land are nominal.
Under the new laws, all fees payable to the Commission for any application made under the new laws will be based on a per centum of the value of the subject matter. Furthermore, the new laws do not permit the Commission to prescribe a cap or collar for such fees. We would hope that the Commission will be permitted to prescribe a cap or collar in the rules to be issued under the new laws by the Cabinet Secretary in charge of land matters.
4.2. Leases over private land
(a) Mandatory provisions?
The new laws now prescribe what appear to be mandatory provisions governing all transactions relating to leases. Part VI of the Land Act deals with leases. This part begins by allowing parties to a lease to vary the application of any of the provisions in Part VI, at their discretion. However, certain provisions within Part VI are deemed to be mandatory. This appears to have been a drafting error. We think the intention was to allow parties to vary the application of the part, save for those provisions deemed to be mandatory. The provisions that are deemed to be mandatory include:
Forfeiture of leases - landlords cannot forfeit a lease without giving notice to the tenant (such notice to be for a minimum of 30 days) requiring the tenant to remedy the breach within a reasonable time (if capable of remedy). In addition, upon issuance of the notice, the tenant has a statutory right to seek the court's relief from forfeiture. In considering such an application, the court shall look into the conduct of the parties and the circumstances of the case.
Retrospective effect - tenants who are presently undergoing a forfeiture process, which begun prior to the enactment of the new laws, may go to court and stop the ongoing process and require that the forfeiture process be commenced under the new laws.
The exercise by landlords of their right of forfeiture will now take longer. In addition, tenants will almost certainly invoke their rights for relief in court, in which case the conduct of the parties will be considered by the court. In effect, this means that before seeking to exercise the right of forfeiture, landlords should consider all other remedies available to them and afford the tenant sufficient time and opportunity to remedy the breach.
Obligation not to withhold consent unreasonably - Where there is an obligation for the tenant to obtain the consent of the landlord before doing something (or not doing something), there is now a deemed obligation on the part of the landlord not to unreasonably withhold consent. The landlord is also required to give or refuse consent within a reasonable time. Actions that will be deemed unreasonable include:
Requesting payment of a fee (other than to cover landlord's costs in granting consent); and
Imposing an unreasonable condition
(b) Certificates of title to be issued for certain leases
Under the Land Registration Act, certificates of title will be issued for leases for a period exceeding 25 years. However, under the Land Act, long term leases for 21 years are deemed to confer title and title deeds should ideally be issued over such leases as well. There appears to be an inconsistency between the two laws.
4.3. Charges over private land - mandatory provisions and retrospective effect
There are now new provisions on regulating charges over land. These provisions are mandatory and have retrospective effect, which means that they will apply to charges created before the new laws came into force.
Enacting laws with a retrospective effect is unusual, particularly where the retrospective effect is likely to cause detriment. In our view, retrospective legislation that leads to any form of arbitrary expropriation of a right or interest in land may be challenged for being unconstitutional.
Some of the key provisions regulating charges over land, including charges created prior to the commencement of the new laws, are as follows:
(a) Variation of interest rates - notice required together with simple explanation to the borrower
Where parties have agreed to a variable interest, any increase or decrease may only be effected upon giving a 30 days' notice to the borrower and stating clearly 'in a manner that can be readily understood' the new interest rate to be applied.
(b) Alternative to further charges? - memorandum of increase or decrease in amount secured
The amount secured by a charge may be increased or decreased by a signed memorandum endorsed or annexed to the charge instrument. The memorandum may also vary the terms and conditions of the charge, including the term of the charge.
(c) Spousal consent required for charge of land; charge may be void if no consent obtained
As discussed above, spousal consent will be required in order to validly charge any land held by a person who is married. If spousal consent is not obtained or if the borrower gives misleading information on the lenders inquiries regarding spousal consent, the charge will be deemed void at the option of the spouse or spouses whose consent was not obtained. This provision does not have retrospective effect.
(d) Chargee's statutory power of sale - longer process and more notices required; duty to obtain best price; ongoing sales by chargees over any land may be stopped
Longer process - the process of exercising the chargee's statutory power of sale is now more procedural with the addition of at least 40 days on the notice periods previously applicable.
Forced sale valuation required - a forced sale valuation must be undertaken before exercising the statutory power of sale. The valuation shall be undertaken by a registered and licensed valuer (under the Valuers Act).
Duty of care to obtain best price - secured lenders are now under a statutory duty of care to "obtain the best price reasonably obtainable at the time of sale" in exercising their statutory powers of sale over the charged land. This duty of care is owed to the borrower, guarantors and subsequent lenders secured on the same land.
More ways in which sale may be concluded - statutory power of sale may be by way of private contract at market value or public auction at a reserved price. In addition, the sale may be of the whole or part of the land, by way of subdivision, for purchase price to be payable in one sum or by instalments or such other conditions as the lender may think fit taking into account their duty of care to obtain the best price reasonably possible.
Retrospective effect on ongoing sales by chargees - where a secured lender had initiated "any steps to foreclose a charge" before the enactment of the new laws, the borrower may apply to court for an injunction to stop the continuation of any such step. If such an injunction is issued, the lender may commence fresh proceedings under the new laws in order to exercise their statutory power of sale.
(e) Matrimonial property - charge may be re-opened and terms varied
The court may re-open a charge of any amount secured on matrimonial property, "in the interest of doing justice between the parties". We presume the parties referred to by this provision are the lender, the borrower, the borrower's spouse and any guarantors.
The power to re-open a charge may only be exercised by the court, on an application made by the borrower, the lender or the registrar (in certain circumstances). The court has wide powers in considering an application to reopen a charge on matrimonial property. Furthermore, the court is required to consider, among other things:
the financial standing and resources of the borrower, relative to those of the lender, at the time the charge was created;
the interest rates and any variation thereof from time to time; and
the age, gender, health, experience and understanding of the commercial transaction of the borrower, at the time the charge was created.
4.4. Corruption and other Offences
(a) Corrupt Transactions - transaction may be deemed void and land forfeited
Where the granting of public land or issuance of certificates of ownership is induced or obtained through corruption on the part of any government official or employee of the Commission, the transaction shall be void and of no legal effect.
Any land acquired through a process tainted with corruption shall be forfeited to the Government. The term "corruption" shall be construed as defined in the Anti Corruption and Economic Crimes Act, 2003. This definition is wide and includes 'abuse of office' and 'breach of trust'.
(b) Offences and penalties
The new laws introduce new offences:
There are several offences related to the giving of false information and other fraudulent practices and these are punishable by a fine of up to KES 10,000,000; imprisonment for up to 10 years, or both. Interestingly, the Land Registration Act has a more lenient punishment for the same offences, being a fine of up to KES 5,000,000 and imprisonment of up to 5 years or both. These provisions may need to be harmonized.
Unlawful occupation of public land is now an offence which will attract fines of up to KES 500,000 and if a continuous offence, a sum not exceeding KES 10,000 for every day the offence is continued;
Wrongful obstruction of a public right of way is now an offence and will attract a fine of up to KES 10,000,000 and if a continuous offence, a sum of up to KES 100,000 for every day the offence is continued.
In addition to these criminal sanctions, any rights over land that were obtained by virtue or on account of an offence may be cancelled or revoked.
4.5. Other matters: Savings and transitional provisions; rules to be published and land court
(a) Rules to be approved by Parliament in certain instances
The Commission and the Cabinet Secretary will have powers to make regulations to better carry into effect the provisions of the Land Act and Land Registration Act. The matters to be regulated by the regulations have been outlined and include, with respect to squatters, regulations that "facilitate negotiations between private owners and squatters" and also those that deal with the " transfer of unutilized land and land belonging to absentee land owners to squatters".
Where the Cabinet Secretary (as opposed to the Commission) makes regulations under the Land Registration Act, these have to take into account the advice of the Commission and be tabled before Parliament for approval. This is meant to allow for public scrutiny and introduce transparency in the creation of the regulations. More importantly, this is meant to ensure that the regulations are consistent with the general objectives of the Commission.
(b) Savings and Transitional Provisions - unclear
There is a lack of clarity and depth in the transitional provisions of the new laws. In addition, there are vacuums created by the repeal of most of the previous land laws which are not addressed in the new laws. We expect these gaps and the resultant uncertainties to cause substantial delays in land transactions.
(c) Environment and Land Court
The Environment and Land Court will have jurisdiction to hear and determine disputes related to land.
Conclusion
The task of enacting new land laws is Kenya is by no means an easy one, not least because land has always been an emotive subject in Kenya, eliciting views from persons across the economic divide. Our law makers have spent a lot of time trying to balance the views of Kenyans.
In our opinion the new land laws are a start to bringing about change, consistency and consolidation of land laws in Kenya. A key achievement is the enactment of the National Land Commission Act which provides a framework for the Commission to become operational and is one of the very positive highlights of the new laws. Ideally, this should bring about positive change in land management and administration. However, the new laws were undoubtedly passed in haste in an attempt to meet the (extended) deadline set by the Constitution. This is evident in their lack of clarity and substance and is likely to cause much more than just 'teething problems' in the implementation of the new land regime. As noted by one Member of Parliament immediately after passing the new laws "there are many areas to be polished as we continue with this long journey towards true land reforms"

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