Here are the human and systemic interventions needed to curb real estate fraud
Over the past decade, cases of rogue land brokers and surveyors have been on the rise.
What you need to know:
- Over the past decade, cases of rogue land brokers and surveyors have been on the rise.
- Getting contracts reviewed by an attorney can help to identify if there are any red flags in the contract.
On April 10, 2014, after receiving and signing an offer letter for a 2.2 hectares piece of land in Nyahururu, Jane Muthoni began pursuing the issuance of her title document.
About one month later, she was informed that the title had been discharged to the local lands office for her collection. When she visited the office, she was surprised to find that her title had been issued to and collected by someone else.
This prompted her to raise the matter with concerned offices, including the District Lands Adjudication and Settlement offices in Nyahururu as well as the Ministry of Lands in Nairobi.
When she failed to receive the assistance she sought, Muthoni sought the intervention of the Office of the Ombudsman, who undertook an investigation that would later reveal that the registration of the parcel of land in question was fraudulent.
Consequently, the commission recommended a recall of the certificate of title issued and its amendment to the rightful owner.
In another case reported by the office of the Ombudsman, Gilbert Kiara and his wife Lydia Nyamai paid Joshua Namur, a land agent, Sh300,000 to process a title deed for a parcel of land in Malindi.
It seemed suspicious when the agent did not issue a receipt as proof of payment, however, since the agent had been presented by someone well-known to them as a reliable person who would assist them in obtaining their title deed, the couple did not make a fuss regarding this omission. It wasn’t until two months lapsed without the couple having received any documents, when they started to realise that they might have been duped, prompting them to seek legal action.
As investigations would later uncover, Joshua Namur was not a registered agent, however, since no proof of payment could be produced and since the person who made the introduction denied doing so, it became a protracted court battle.
In another case of fraud that happened in June 2024, Timothy Kibet, who was seeking boundary verification on his plot in Ngong, approached John Kinyua, a surveyor, to provide him with the verification service.
For this service, Mr Kinyua asked for payment of Sh50,000 from Mr Kibet. As he could not afford to pay the full amount upfront, Mr Kibet paid Mr Kinyua Sh30,000 in cash as deposit. As was the case before this one, Mr Kinyua did not issue Mr Kibet with a receipt. When the case was prosecuted before court, Mr Kinyua denied having received any money from Mr Kibet.
Over the past decade, cases of rogue land brokers and surveyors posing as professional agents to defraud unsuspecting members of the public of their hard-earned money have been on the rise.
Many of these agents are known to public officials and sometimes work in cohort with them, purporting to be able to process title deeds quickly from the titling centre in Nairobi.
“Due to the increase in appetite for land and the desire for home ownership, there has been an increase in cases of land fraud, and one needs to be vigilant to safeguard their investment,” says Job Kariuki, a director at real estate firm Zani Properties.
Upon identifying a piece of land that is satisfactory in convenience, size, soil or location, Kariuki says that it is prudent to enquire whether the land is registered and available for use by conducting a land search using details on the title deed.
Previously, one had to walk into the lands registry offices at the county and national levels to get this kind of information, but this process has been made simpler through the National Land Management System which integrates all land data on one platform.
“Conduct a search to know the true owner of the land, to know whether the land has a restriction such as a caveat, unpaid rates, or a bank charge, to know the exact size of the land as captured in the land records, to know the history of the land, and to know the rent payable to the government, if there is any,” says Kariuki.
Upon ascertaining that the land is available, the real estate practitioner says that it is advisable to instruct the services of a licensed land surveyor to verify dimensions of the land and confirm the availability of boundaries.
Once that is established, the next step would be to instruct the services of a reputable agent to give a market estimate of the value of the land, thereby protecting one from possible exploitation from the seller or brokers. A good agent will also help you get the best deal on the land.
“You should also instruct the services of a conveyancing lawyer in order to receive appropriate legal representation throughout the sales process,” posits Kariuki.
A lawyer can help one to verify documents such as wills, letters of administration of a deceased estate, and letters of allotment.
Getting contracts reviewed by an attorney can help to identify if there are any red flags in the contract.
“Engaging the services of a conveyancing lawyer can help to resolve some of the common issues that come up in real estate transactions such as validity of titles, or legality of contracts,” remarks Joseph Kamau, a co-director at Zani Properties.
Exchange of monies throughout the land transaction process is also safest when done through lawyers as opposed to directly from the purchaser to the vendor.
“While these services will cost you some money at the beginning, it is a cost worth bearing because it saves you from losing millions of your money to unscrupulous dealers,” urges Kamau.
He adds that due diligence on the land in question can be done by asking neighbours questions about the real owner of the land, history of the land ownership to know whether there are disputes involved, and general questions about the issues often overlooked such as drainage.
Once you are certain that the land in question is fit for purchase, you can instruct your advocate to prepare a letter of offer. The letter of offer is not a legal document but a binding agreement between the two parties involved that proves commitment.
Some letters of offer demand that buyers pay a requisite down payment of at least 10 percent of the purchase price immediately on signing it.
Alternatively, the buyer and seller can mutually agree to open an escrow account which their advocates would oversee until completion of the sale.
“You should, however, avoid paying a booking fee, or deposits that exceed 10 percent of the purchase price of the land,” says Shamton Githere, a co-director at Zani.
After the letter of offer is signed, the seller’s advocate will draw up a sale agreement indicating the names of the buyer and seller, the agreed-on price, the mode of payment and documents to be supplied by the seller to facilitate registration of the transfer of land to the buyer.
Before signing it, one will need to facilitate the area land control board (LCB) composed of the area elders and the county commissioner with a fee ranging between Sh1,000 to Sh5,000 to ascertain legality and transparency of the trade.
The consent from the LCB, together with other documents such as land rent certificate, sale agreement, old title deed, KRA pin, land search, rates clearance from county and transfer instrument shall then be forwarded to the National Land Commission (NLC) to get a consent to transfer ownership of the land.
The buyer would then be required to pay for a stamp duty charged at the rate of four percent of the value of land in urban areas and two percent for rural areas to the Commissioner of Domestic Taxes, before now proceeding to settle the balance of the agreed payment in order to finalise the trade and become the legal owner of the property. Once that is done and one has acquired the piece, they can fence it to restrict encroachment.
To further safeguard buyers against fraudulent transactions, Robert, a co-director at Zani Properties, says that there is a need to address the systemic and human factors affecting service delivery.
The systemic issues include delay in the issuance of titles, processing of applications for boundary disputes and enforcement of summons for land dispute and verifications.
“This points to failure by lands officials to systematically follow the progress of applications and effectively resolve them as stipulated in the service charter of the Ministry of Lands,” posed Njuguna.
In some cases, the huge backlogs and inordinate delay in resolution of boundary dispute and verifications are ploys by registrars to solicit for bribes. Capacity in terms of human and equipment such as computers, transport to undertake field operations, adequate office, electricity and water are also pertinent issues affecting land registries.
“Many land registries have computers, for instance, that are not in use due to lack of electricity. Others do have computers at all, yet most land transactions have moved online,” explained Njuguna.
Poor records management is another systemic issue affecting registries, with rampant cases of missing files and original documents persisting due to lack of proper and secure storage of files in offices.
While the National Land Information Management System, popularly known as Ardhisasa, was developed to resolve this issue, Robert notes that issues with missing details in searches and mismatch of data persist.
“As opposed to helping streamline land transactions, the system has actually created a lot of unnecessary delays, which in extreme cases have gone up to two years,” posed Njuguna.
He added that many users are still experiencing difficulty in uploading and updating titles and leases, which in turn has led to stalling of land transactions, for example buying and selling of land as there is no information from the platform.
“There is a need to educate the public about Ardhisasa as not all Kenyans are computer literate. A significant percentage of landowners are also not aware of what is required from them in terms of uploading titles and searches and creating an account,” remarked Robert.
Meanwhile, some of the human factors affecting these registries include cartels of brokers and abuse of power, incompetence, unresponsiveness and dereliction of duty.
“There is a need to stamp out the rampant practice of rogue persons purporting to be land agents working in cohort with public officials to fleece money from unsuspecting members of the public,” said Njuguna.
