Different Types of Title Deeds in Kenya: A Beginner’s Guide.

Different Types of Title Deeds in Kenya: A Beginner’s Guide

Buying land or property is a major financial decision. For someone doing it for the first time, terms such as title deed, freehold, leasehold, sectional title and title search can sound complicated.

So, what exactly is a title deed?

In simple terms, a title document is an official document connected to the registration of ownership or another registered interest in land. In Kenya, the Land Registration Act provides for the registration of interests in land and for the Registrar to issue a certificate of title or certificate of lease in the prescribed form.

However, there is an important distinction to understand.

Freehold and leasehold describe forms of land tenure, while a certificate of title or certificate of lease is the document issued as evidence of the registered interest.

There is also sectional property ownership, which is particularly important when buying apartments and individual units within larger developments.

Let's break it down in simple terms.

What Is a Title Deed?

A title deed is the term commonly used when referring to the document showing registered ownership or an interest in a particular piece of land.

It contains important information about the property and the person or entity registered as the proprietor.

For example, when purchasing a piece of land, you would want to know:

·         Who is registered as the owner?

·         What is the property’s parcel number?

·         What type of tenure does the property have?

·         Are there any restrictions or other interests registered against it?

A title document is therefore an important part of property ownership, but buyers should not rely on the document alone. Proper verification and due diligence are important before completing a property transaction.

Understanding Freehold and Leasehold

One of the first things a property buyer should understand is the difference between freehold and leasehold.

These are forms of land tenure recognized under Kenya's land laws.

1. Freehold Property

A freehold interest generally gives the registered proprietor an interest in land without a fixed expiry date, subject to the Constitution, applicable laws and any conditions affecting the property.

In simple terms:

Freehold means the registered interest is not held for a fixed lease period.

The State Department for Lands provides an official Certificate of Title under the Land Registration Act, while its land-register forms also distinguish absolute titles from leasehold registrations.

Example

Imagine you purchase a piece of land registered under freehold tenure.

You become the registered proprietor of that land, and your interest is not scheduled to expire after a specific number of years simply because it is freehold.

However, this does not mean that you can use the land without restrictions. Planning requirements, environmental laws, registered conditions and other applicable laws can still affect how the property is used.

2. Leasehold Property

Leasehold is different from freehold.

A leasehold interest gives a person the right to use and occupy land for a specified period, according to the terms and conditions of the lease.

You may therefore see property advertised as having a 99-year leasehold.

This means the registered leasehold interest is for the specified term. It is important to check the actual lease, including the remaining period and any conditions attached to it.

The State Department for Lands provides an official Certificate of Lease, and the Land Registration (General) Regulations prescribe the certificate of lease in Form LRA 21.

Example

Suppose you are considering buying a property with a leasehold title.

Before buying, you should find out:

·         How many years remain on the lease

·         Whether there is applicable land rent

·         What conditions apply to the lease

·         Whether there are restrictions or other registered interests

·         Whether the lease can be transferred according to the applicable requirements

The fact that a property is leasehold does not automatically mean that it is a bad investment. What matters is understanding the terms and making an informed decision.

What Is the Difference Between Freehold and Leasehold?

The easiest way to understand the difference is to think about duration.

Neither should automatically be considered better than the other.

The right choice depends on the property, location, intended use, costs, remaining lease period and the buyer's circumstances.

3. Sectional Property Titles

If you are buying an apartment, you may encounter another form of property ownership: sectional property.

This is especially important because an apartment unit is different from buying an entire standalone parcel of land.

Under Kenya's sectional-property framework, a building can be divided into individual units that can be owned separately, while certain parts of the development are treated as common property.

For example, an apartment development may have:

•  Individual apartments
•  Parking areas
•  Corridors
•  Staircases
•  Lifts
•  Shared recreational areas
•  Other common facilities

The individual apartment can have its own registered ownership while the common property is shared according to the sectional-property framework.

The State Department for Lands currently provides both a Certificate of Title for Sectional Property (Form SP-13) and a Certificate of Lease for Sectional Property (Form SP-14). This means sectional property can involve either a freehold or leasehold interest, depending on the property.

Example

Imagine you want to buy a two-bedroom apartment in Nairobi.

You are not necessarily buying the entire piece of land on which the apartment building stands.

Instead, you may be buying a particular unit within the development, together with the interest in common property that comes with that unit.

The sectional-property documents identify details such as the unit number, approximate floor area and sectional plan. The official Form SP-13 provides for a certificate of title for a freehold sectional unit, while Form SP-14 provides for a certificate of lease for a leasehold sectional unit.

So, Are Freehold, Leasehold and Sectional Titles the Same Thing?

No.

This is where property terminology can become confusing.

Freehold and leasehold describe the nature of the land interest.

A certificate of title or certificate of lease is the registered document issued for that interest.

Sectional property describes a system of owning individual units within a larger development.

A sectional unit can itself be held as either a freehold or leasehold interest, depending on the property.

Understanding this difference can help you avoid confusion when looking at property advertisements or documents.

What Is a Title Search?

A title search is one of the important steps in property due diligence.

It allows a buyer to verify information recorded in the land register and check matters affecting the property.

For example, a buyer may want to establish:

·         The registered proprietor

·         The parcel or title details

·         The nature of the registered interest

·         Whether there are charges

·         Whether there are cautions

·         Whether there are restrictions

·         Other registered interests affecting the property

Kenya's land-registration system provides for these types of entries, and the State Department for Lands provides official search-related services.

This is why buyers should not simply rely on a seller's statement that a property has a "clean title."

The information should be independently verified through the appropriate land-registration process.

Why Is a Title Search Important Before Buying Property?

Imagine finding a property that you really like.

You agree on the price and are ready to pay a deposit.

Later, you discover that there is a registered charge, caution or restriction affecting the property.

This is one of the reasons proper due diligence is so important.

Before committing to a property purchase, a buyer should consider verifying the property's records and seeking appropriate professional advice.

A buyer should also consider checking:

·         The identity of the registered proprietor

·         The property's parcel or title details

·         The type of tenure

·         Any charges, cautions or restrictions

·         The remaining lease period where applicable

·         Land rent and rates requirements where applicable

·         Whether the physical property matches the documents

·         Access to the property

·         Boundaries and other relevant physical details

What Should You Check on a Leasehold Property?

If you are buying leasehold property, the remaining lease period is particularly important.

For example, a property may have originally been granted for a long lease, but several years may already have passed.

Therefore, don't simply look at an advertisement saying "99-year leasehold."

Find out:

When did the lease begin?

How many years remain?

What obligations are attached to the lease?

Are there any registered restrictions or other interests?

These details can affect the property's value, financing and suitability for your plans.

What Should You Check When Buying an Apartment?

Buying an apartment requires its own due diligence.

In addition to checking the ownership documents, a buyer should understand:

·         The specific unit being purchased

·         The sectional plan

·         The unit's approximate size

·         The common property

·         Service-charge arrangements

·         Any applicable restrictions

·         The ownership structure

·         Whether the required sectional documentation has been registered

The official sectional-property forms show that individual units are identified separately and can have either freehold or leasehold interests.

This is why buyers should understand exactly what is included in the purchase.

Is Having a Title Deed Enough?

Not necessarily.

A title document is extremely important, but buying property involves more than simply looking at a document.

A buyer should also consider the property's physical condition, boundaries, access, planning requirements and any other matters that could affect the intended use of the property.

Legal and professional due diligence can help identify issues that may not be obvious from simply viewing the property.

For a major property transaction, it is advisable to seek appropriate professional guidance, including legal advice where necessary.

Common Mistakes First-Time Property Buyers Make

First-time buyers can easily make mistakes when they are excited about finding a property.

Some common mistakes include:

·         Paying before verifying ownership

·         Relying only on a copy of a title document

·         Failing to conduct a title search

·         Not checking the remaining lease period

·         Ignoring registered restrictions or charges

·         Assuming every apartment has the same ownership structure

·         Failing to inspect the actual property

·         Not understanding the costs involved

·         Rushing into a transaction because of pressure from the seller

Taking your time to verify the property can be much more valuable than rushing to complete a purchase.

What to Remember Before Buying Property in Kenya

If you are buying property for the first time, you do not need to become a land-law expert before you start.

The most important thing is to understand the basics.

Know what you are buying.

Know who owns it.

Understand whether it is freehold or leasehold.

If it is an apartment, understand the sectional ownership structure.

Verify the property's records.

Check for charges, cautions, restrictions and other relevant interests.

Understand the costs and obligations associated with the property.

Seek professional advice when necessary.

Most importantly, do not make a large property payment simply because someone tells you that the property has a "clean title."

Take the time to verify the information through the appropriate channels.

Making an Informed Property Decision

Understanding title documents and land tenure is an important first step for anyone considering buying property in Kenya.

Freehold and leasehold are different forms of land tenure, while certificates of title and certificates of lease are official registration documents used for registered interests in land. Sectional property adds another important layer when buying individual units such as apartments.

The most important lesson for a first-time buyer is simple: do not rely on appearances or promises alone.

Understand the property, verify the ownership records, carry out proper due diligence and get professional help when necessary.

A little research before buying can help you make a more informed property decision and avoid problems later.