|Africa Legal Network: Proposed Overhaul Of Land Regimes In Kenya - Will It Work?|
|Friday, 24 February 2012|
Parliament has voted to extend the deadline for the land bills by 60 days. Hopefully, during that period, the main issues outlined by Africa Legal Network (ALN) in this article will be addressed.
Land is the most important resource to Kenyans and managed by the government so poorly! Currently, there are five different legal registration regimes, numerous registries and files upon files of information!
In 1963, the then government recognized the many problems in our land system and had made an attempt to regularise the land system with the formulation of the Registered Land Act (the RLA).Although some land was regularised under the RLA, the RLA has remained a failed attempt of the Government. The lack of a centralized land management and registration system is one of the main reason for the rampant misappropriation, land grabbing and fraud cases that have plagued our lands registries. Land has been, and continues to be, a sensitive issue for Kenyans and has been the genesis of most economic and political issues in Kenya, the most glaring reminder being the post-election violence in 2007/2008.
The drafters of the constitution recognised the prevailing land problem and land is therefore a main feature of the new constitution promulgated in August, 2010, with a whole chapter dedicate to it: Chapter 5 introduces new rules relating to land and requires new land legislation to be enacted to give effect to the provisions of the constitution. Under the constitution, legislation on land is required to be enacted within 18 months from the promulgation of the constitution. This deadline was 26 February 2012. The government, through the Ministry of Lands, released:
for comment through a public notice published on 14 October 2011. The bills propose to overhaul the land laws in Kenya as anticipated by the constitution.
In our review, we have come across several inconsistencies, errors and ambiguous or problematic provisions in the Bills which require the government to re-visit the bills prior to them being passed into law. The bills are extensive and bulky documents. In this note, we have attempted to summarise the key changes proposed by the bills and the effects of the same. We have also identified the major areas of the bills that need to be re-considered by the government.
A New Land Regime
The objective of the Land Bills is to give effect to Article 68 of the constitution, to revise, consolidate and rationalise land laws; to provide for the sustainable administration and management of land and land-based resources, to rationalise the law governing the registration of title to land, to regulate dealings in registered land and for connected purposes.
The following is a list of the statutes that are intended to be repealed if the bills are passed into acts and become law:
1) The Indian Transfer of Property Act 1882;
2) Distress for Rent Act, Chapter 302, Laws of Kenya;
3) Registered Land Act, Chapter 300, Laws of Kenya;
4) The Registration of Titles Act, Chapter 281, Laws of Kenya;
5) Government Lands Act, Chapter 280, Laws of Kenya;
6) Land Titles Act, Chapter 282, Laws of Kenya;
7) The Way Leaves Act, Chapter 292, Laws of Kenya; and
8) The Land Acquisition Act, Chapter 295, Laws of Kenya.
There are several chapters of the Land Bill that are similar to the provisions of the current land statutes in Kenya. For example, the chapter on controlled transactions in relation to agricultural land mirrors the provisions of the Land Control Act, Chapter 302, Laws of Kenya. Similarly, the chapter on compulsory acquisition of interest in land is similar to the provisions contained in the Land Acquisition Act, Chapter 295, Laws of Kenya. However, the provisions of the Land Bill are more detailed with regards to compensation of persons whose land is compulsorily acquired and the right for persons who have an interest in the land that is sought to be compulsorily acquired.
The new chapters that have been incorporated in the Land Bill include the management and administration of public land; land settlement; easements and analogous rights; and administration and management of private land. It is intended that the Land Registration Bill shall apply to all public, private and community land. Several provisions of the RLA have been replicated in the Land Registration Bill. The key provisions of concern that should be noted are as follows:
Management of Public Land
The Land Bill provides for the management of public land by the National Land Commission (the Commission). The Commission is required to keep a data base of all public land, which data shall be shared with stakeholders. The Commission is also mandated to allocate public land (other than land that is within a water catchment area or forest) by way of auction to the highest bidder for housing, agriculture, commerce, industry, tourism and recreation or any other purpose at prevailing market value.
The Land Bill, however, confers wide spanning powers to the Cabinet Secretary responsible for land, which powers seem to usurp the powers conferred on the Commission and Parliament by the constitution e.g. mobilisation of resources for management of land, overseeing statutory bodies to oversee land use planners, surveyors, valuers and estate agents, ascertaining and registering land rights, regulating the use and development of land, prescribing the minimum and maximum land holding acreages in respect of private land etc. The provisions of the Land Bill with respect to the powers of the Cabinet Secretary will therefore need to be streamlined to be in conformity with the constitution.
Administration of Public Land
The Land Bill, among other matters, provides that the Commission may grant a person a licence to occupy unalienated public land for temporary purposes as it may prescribe. This section is ambiguous and may be a loophole for abuse. There are vast tracks of very valuable land that remain unalienated and if the manner in which the Commission is permitted to deal with such land is not legislated, the same can be abused.
Land Registration and Indefeasibility of Title
The Cabinet Secretary of the Ministry of Lands is mandated to constitute land registration district(s) and each registration district shall maintain a land register. Information in the register is required to be made accessible to the public electronically, but the registrar may restrict access to designated information. Maps for every registration district (which are referred to as Cadastral Maps in the LRB) shall be prepared by the statutory body responsible for surveys. This provision does away with the existing deed plans.
The LRB provides that the Certificate of Title issued by the Registrar of Lands upon registration shall be taken by all courts as prima facie evidence that the person named therein as the proprietor of the land is the absolute and indefeasible owner.
Impact on Long Term Leases
The provisions of the bills provide that no part of the land comprised in a register shall be transferred unless the proprietor has first subdivided the land and new registers have been opened in respect of each subdivision. In addition, the registrar shall not register long term leases over apartments, flats, maisonettes, town houses or offices having the effect of conferring ownership, unless the property has been properly geo-referenced and approved by the statutory body responsible for survey. Utilising long term leases has become the main mode of selling town houses by developers due to the length and costs involved in subdividing land. The implication of this provision is massive for developers as it may render long term leases redundant due to the long winded process that will be involved in having the land geo-referenced and approved by the statutory body responsible for survey.
Limits on Vendors Remedies
The Land Bill provides that if there is possession by a purchaser under a contract for the sale of land, a vendor can only exercise any contractual right to rescind the contract for breach by either resuming possession of the land peaceably or obtaining an order for possession of the land from the court. The current position under the ubiquitously used Law Society Conditions of Sale is that any purchaser who is granted early possession holds such land as licensee of the vendor and not as tenant or owner of the property. The impact of this provision is that sellers of land need to be cautious in granting early possession of a property when a purchaser has either not completed his payment obligations or even registration has not been finalised. In the event that a purchaser breaches the terms of a contract for the sale of land, the only remedy for a seller is forfeiture of the deposit.
Uncertainty on Controlled Transactions
The Land Bill does not specifically repeal the Landlord and Tenant (Shops, Hotels and Catering Establishment) Act, Cap 301 Laws of Kenya, but the Land Bill provides that it shall apply to all leases. Its provisions on leases are inconsistent with those under the Landlord and Tenant (Shops, Hotels and Catering Establishment) Act as it does not mention controlled tenancies. An assumption can be derived from this that the Landlord and Tenant (Shops, Hotels and Catering Establishment) Act continues to apply to controlled tenancies.
Adverse Effect on Leases
Sections 56 and 57 of the Land Bill also contain certain implied terms which must be included in any every lease. The implied terms will affect both the lessor and the lessee and are not voluntary. The sections state that these implied covenants are mandatory and binding on the respective parties. Parties to leases would need to review the sections carefully as they would be binding, notwithstanding any contrary arrangements between them.
Section 60 of the Land Bill contains provisions to the effect that where in a lease the lessee is required to obtain the lessor’s consent in order to take an action and the lessor refuses to grant consent, the lessor is required to inform the lessee of the reasons for his refusal if the lessee so requests in writing. This implies that the lessor should not unreasonably withhold his consent.
In addition, section 65 (2) of the Land Bill provides that if there is a covenant in the lease that the lessee shall not transfer or assign the lease without the consent of the lessor, any transfer or assignment of the lease without the lessor’s consent shall take effect even though it is done in breach of this covenant but this does not prevent the lessor from seeking any remedy for such breach.
Section 66 of the Land Bill provides that the power of a lessor to determine the lease by re-entry or forfeiture is abolished. Similarly, section 67 (1) of the Land Bill abolishes the right of the landlord to distrain for arrears of rent or any other payments under the lease. The only remedy for termination of a lease for breach is to apply for an order of the court for possession of the land or buildings comprised in the lease.
Effect on Mortgages and Charges
Another interesting development is that mortgages have been done away with. The LRB states that a charge shall not operate as a transfer but shall have effect as a security only. The Land Bill will apply to all charges of land made or coming into effect before on or after the coming into operation of the Act.
Charges over the matrimonial home shall only be valid if the document or form used in applying for such charge and the document or form used to grant the charge is signed by or there is evidence that it has been assented to by any spouse of the borrower living in that matrimonial home.
The lender will have a duty to make inquiries of the other spouse on whether or not that spouse has consented to the creation of the charge or where a spouse purports to assign or transfer of land the assignee or transferee shall have the duty to make inquiries of the other spouse on whether or not the spouse has consented to the assignment or transfer.
The Land Bill also introduces several types of charges including small charge, customary charge, informal charge and lien by deposit of documents (equitable charge). The rate of interest under a charge may be reduced or increased by written notice to the borrower of not less than 30 days. This provision introduces the requirement that a lender must give notice to the borrower in the event that they vary the interest rate.
The amount secured by a charge may be reduced or increased by a memorandum which is endorsed or annexed to the charge. The memorandum of reduction is signed by the lender and a memorandum of increase is signed by the borrower. This new provision will do away with the preparation and registration of further charges. The Land Bill recognises transfers of charges at the request of the borrower or at the request of: inter alia, any person who has an interest in the land that has been charged or any creditor of the borrower who has obtained a decree for sale of the charged land. Any rule of law, written or unwritten, entitling a lender to foreclose the equity of redemption is abolished.
As regards to a lender’s right to sell charged land, the lender has a duty to the borrower, guarantor and any lender under a subsequent charge to obtain the best price reasonably obtainable at the time of sale. Where the price is 25% or more below the average price at which comparable interests in land of the same character and quality are being sold in the open market, there shall be a rebuttable presumption that the lender is in breach of the duty imposed on him and the borrower may apply to a court for an order that the sale be declared void.
Contrary to current practice, a lender can, with the leave of the court, sell the land to itself if the court is satisfied that this is the most advantageous way of selling the land. If the sale is by auction, the lender must be the highest bidder or his bid must be equal to or higher than the reserve price put upon the land before the auction.
Joint Tenancies and Tenancies in Common
A new provision has been introduced in relation to co-tenancy in the LRB that states that after the commencement of the LRB and except with the leave of the court, the only joint tenancy that is capable of being created is one that is between spouses. Any joint tenancy that is not between spouses and is without the leave of court will be a tenancy in common. This provision has introduced a situation where joint tenancy except for spouses is no longer recognised. This means that where property is owned jointly, if one person dies, the share of the deceased person will be inherited by the deceased’s heirs as opposed to the surviving co-owner as is the case in a joint tenancy. There is a rebuttable presumption, where the nature of the relationship has not been specified, that spouses shall hold land as tenants in common and not joint tenants.
The transitional provisions under the LRB in relation to how existing titles under the Government Lands Act (GLA) and the Land Titles Act (LTA) will be dealt with are not very clear. The LRB provides that that existing title deeds and documents registered in respect of properties registered under the Registration of Titles Act (RTA) and the RLA will continue to be valid under the LRB.
However, for titles held and documents registered pursuant to the GLA and the LTA, the registrar is required to, as soon as conveniently possible, to cause the existing titles to be examined, prepare a new register and issue new certificates of title or lease. It is not clear why titles held under the GLA and the LTA require to be examined and this provision does not apply to RLA and RTA properties. The LRB also does not provide for the criteria for examination of titles previously under GLA and LTA and this creates uncertainty and appears to be left to the discretion of the registrar.
The above is just but a sample of the wide ranging changes that are proposed to by the bills. Suffice to say, the bills will affect a wide range of people including vendors, purchasers, advocates, developers, surveyors, banks, investors, real estate agents and any other person who directly deal with or in land.
Although the bills are to a great extent laudable for their intention to streamline legislation affecting land in Kenya, some of the provisions especially relating to sale of land, management of public land, leases and charges and mortgages may lead to uncertainty in the property market which is currently experiencing a boom and open a floodgate of litigation.
For example, the value of land as an effective security for financial institutions may be diminished due to restrictions in the bills; the current land sale practice where a purchaser is given early possession may not appear very feasible for a seller under the terms of the bills; leasing property may no longer be an attractive proposition as landlords cannot assume that their contractual rights under their leases will be enforced and upheld by the courts; and uncertainty may be created with regard to the status of titles which had been previously granted under the GLA and the LTA.
Republished with kind permission
Anjarwalla & Khanna, February 2012
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