PURCHASING A PROPERTY IN KENYA (Nairobi)

Just like Kenyan citizens, foreigners are
permitted to buy commercial and residential
properties/land located within a town
or municipality without any restrictions
whatsoever, provided that they comply with the
laid down procedures. The only restrictions are
on owning agricultural land, freehold titles and
first row beach plots along the Kenyan Coast.
Article 65 of the Kenyan Constitution limits
foreigners to holding only leasehold titles
for a maximum of 99 years but permits
future renewals on condition that the subject
property held under that title is economically
active and it is not required for public use
purposes. This therefore means that if a
foreigner purchases a property held under a
freehold title, it will revert to leasehold. The
restriction also applies to companies that are
not wholly owned by citizens or property held
in trust whose beneficiary is not a citizen.
The Land Control Act Cap Protected content the Laws of
Kenya regulates transactions on agricultural
land. Foreigners or privately owned companies
whose shareholders are not all Kenyan citizens
are not permitted to buy/own agricultural
land as stipulated in Section 9 (c). However,
such transactions can be exempted by the
President based on the provisions of Section
24. Such exemptions are normally done
through a publication in the Kenya Gazette
hence foreign investors wishing to acquire
agricultural land may apply for such exemption

PURCHASING PROCESS

The standard transaction period for the sale
of property in Kenya has become 90 days
effective from the date of signing the sale
agreement — through to completion. Although,
parties can mutually agree on any closure
period that suits them.
The purchaser begins with identifying a suitable
property for purchase. One needs to enlist the
services of a reputable real estate agency/firm/Law Firm
to assist them in identifying a suitable property.
Then the buyer should endeavor to visit the
site and satisfy themselves that it meets the
desired criteria including its physical location
and boundaries.
Once the property has been identified, the
buyer makes a formal expression of interest/
offer subject to contract detailing their offer
price, terms of payment and advocate details.
If the offer is accepted by the seller, then
the agent prepares a Letter of Offer (LOO)
confirming the salient details of the agreed
transaction. This is then signed and acts to
formally instruct the legal teams of both parties.
After an offer has been accepted, buyers
should conduct due diligence on the property.
In addition to conducting an official search on
the title at the Lands offices, they also need to
engage a licensed surveyor to ascertain that
the land size and boundaries indicated on the
deed plan match what is on the ground. All
registered land is subject to certain overriding
interests which may subsist without their
being noted on the register. This may include
but are not limited to; spousal rights over
matrimonial property, trusts, rights of way,
rights of water, etc. Due diligence will also
need to be done in this regard. The documents
ordinarily required from the buyer as part of
the vendor's due diligence would, amongst
others, include copies of their Personal
Identification Documents (ID/Passport copies)
and PIN Certificate. In the event of a Company
purchase, the Certificate of Incorporation and
PIN Certificate would form part of the
ID documents.
If the due diligence is successful, buyers
then instruct their advocates to proceed
to contract stage. The procedure may vary
slightly depending on whether one is buying
a completed property (ready for occupation),
land or off-plan property. In the former,
after paying the deposit, the transaction is
completed within a defined closure period,
normally 90 days, from the date of signing the
sale agreement. In the latter, after paying
the requisite deposit, buyers normally pay a
percentage of the purchase price in equal
installments until the project is completed.
Therefore, the main difference between buying
the former and the latter are the payment terms.
Buyers are required to sign the Letter of
Offer as a sign of assurance to transact.
Some Letters of Offer demand that buyers
pay a requisite down payment/deposit
of at least 10% of the purchase price
immediately on signing it. Other Letters of
Offer simply seek to establish the buyer’s
commitment to the deal by way of a signed
agreement regarding the basic terms of
sale. In this case, the deposit is held by
the seller’s advocates as stakeholders
pending completion of the transaction
in accordance with the terms of the sale
agreement. Alternatively, the buyer and
the seller can mutually agree to open a joint
escrow account mandating both their
advocates to oversee the purchase funds
until completion of the sale.
Normally the turnaround period for signing
the Letter of Offer is between 7 to 14
days from the date of issue.