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When the Deal is Too Good
Credit - kisumu-kenya.com

Real estate agents based here admit that Kenyans living abroad are among their top clients, who include a crop who want to dispose off their property as they relocate to the West. In Kisumu, those buying property prefer leafy suburbs such as Milimani, Tom Mboya, Kenya-Re and Mountain View estates.

"Those with specific designs in mind are opting to buy land on the leafy Riat Hills where they build their homes," says Victor Oluoch, the operations manager of Ounga Commercial Agencies in Kisumu.

But now, property experts are warning of bogus agents who are scheming to fraud unsuspecting buyers. Many have opened up glossy websites to attract buyers who are ignorant about the legal procedures of purchasing property.

In Eldoret, such transactions are also on the increase. Although Property Point’s managing director, Simon Lilan, concurs that bogus transactions are on the increase, he says it goes both ways.

"We also have to be very cautious when selling property on behalf of owners living abroad lest the transaction turns sour," says Lilan.

To avoid this, Oluoch says it is important for dealers to insist on valid documentation. "Written agreements are the best defence when carrying out any transactions," he says.

Often, bogus agents insist that the prospective buyer pay a 10 per cent deposit of the total purchase price to ensure the transaction is completed. "Some of these fake agents also take advantage of citizens who have been living abroad for long and are therefore, not very conversant with prevailing market prices," he says.

Legal procedures ignored

On this, John Ogam, the managing director of real estate firm Gwili Consultants says: "Most victims have fallen prey to fraudsters because they do not follow the legal procedures when purchasing property. He adds: "Kenyans working abroad may be in a hurry to acquire prime property so they overlook several critical processes such as simple official searches."

In Kisumu, several cases have been reported where buyers have unknowingly been given fake title deeds. "To protect yourself against this fraud, buyers or sellers based abroad should involve a relative or lawyer to represent them," says Ogam.

Lawyer David Otieno of Otieno, Ragot and Company Advocates concurs. For Kenyans living in the Diaspora, Otieno says, it is important to give a close relative power of attorney to transact business on their behalf. The power of attorney is a legal document that gives a trusted person or advocate power to transact on behalf of the seller or purchaser.

"Property law requires that transactions relating to land be in writing, and this is one of the requirements of valid contracts," he says.

Power of attorney can either be special or general. When it is special, the trusted agent reserves the authority to perform a specified function like sell or identify a prospective buyer on behalf of the owner.

Lawyer Cleveland Ayayo says a Notary Public must attest the power of attorney to or from abroad. "The role of a Notary Public is equivalent to a Commissioner of Oaths but he attests documents that are to be used overseas," explains Ayayo.

This legal document must be registered with either the Registrar of Lands in the districts or the Commissioner of Lands in Nairobi. Furthermore, the law has provisions for the buyer or seller of property to revoke the power of attorney at any time.

When property has impediments

There are occasions too, at which unknowing buyers send money to sellers abroad for property with encumbrances. For instance, some Kenyans leave behind properties that are either mortgaged or charged with debts running into millions of shillings. Other properties on sale may also be under caution, which requires that it be lifted before any sale can proceed.

Ogam advises that when faced with such properties, it is important for buyers to write legal documents seeking clarification at financial institutions.

"If for instance, the owner abroad has an outstanding debt on a loan, then he has to put in writing, how and when he intends to clear the amount," explains Ogam. He says it is safer for the seller to leave a copy of his passport and identity card with his attorney in Kenya as a show of transparency.

"The details in the passport or identity card must correspond with the search documents to offer clarity of the transaction," says Ogam.

Outstanding loans must be cleared before banks can discharge the encumbered property. It is important to note that property cannot be bought across the counter as claimed by bogus agents.

"Land surveyors and valuers must be brought on board to ensure that the right property is being sold legally," he says.

Lawyers concur that while official searches of property are done at the District Land Registries countrywide, they are not enough to give a property a clean bill of health. The surveyor must physically go to the grounds to confirm that the map of the property corresponds with the results of the official search.

The surveyor must also check for beacons and confirm the boundaries of the property in question.

Property lawyers insist that a second official search must be conducted at the District Lands Registry to confirm ownership after sale.

Names of owners must be changed in the documents after titles have been transferred from the seller to the buyer.

By Harold Ayodo-Eastafricanstandard  Sept 17 2008
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