What can be done to rid real estate of  fraudsters

Real estate players are reeling from shock following the collapse of the Simple Homes housing project, in which unsuspecting investors lost more than Sh500 million.

The story started like a fairy tale, with colourful images of the company’s housing project on their social media accounts, videos on YouTube and even sponsored content in the mainstream media. But barely two years later, the company closed shop, leaving the investors high and dry.

As those behind the company’s collapse enjoy their windfall and those who put their money  in the project try to come to terms with their losses, questions abound.

For instance, what went wrong? Is it because of professional negligence by property lawyers who failed to do serious background checks or is it carelessness on the part of buyers blinded by the desire to own property?  What is the regulator (or respective government bodies) doing?

The problem, according Ms Grace Njeri, a Nyeri-based lawyer, is bigger than the different stakeholders would care to admit.

FOREIGN INVESTOR

“At face value, we might be tempted to view all these as one-off problems, but the fact that  they keep recurring, and the amounts lost keep increasing, indicates that there are things we are not doing right, and which need urgent remedies,” she says.

Ms Njeri says that the  sad thing is that we only get to hear about the few cases that are reported. If all such scams are to be brought to the fore, she says, we would be alarmed by the sheer numbers, adding that  many people choose not seek legal redress after being conned.

She adds that such schemes shatter many people’s dreams of ever owning real property.

But Mr Gerald Gikonyo, a real estate practitioner in Narumoru, believes the real estate industry is basically out of control, which makes it easy for con men to come in easily, steal con people and go scot-free.

“It is clear that the middle class has grown rapidly, and this has led to greater demand for houses and land. Add to this the increasing number of foreign investors who need premises and  the frequent changes in land laws and you have a recipe for disaster,” he asserts. Mr Gikonyo says the rapid growth of the industry has left it with many loose ends, which has  created loopholes that the crooks use to exploit potential investors.

“The industry is largely unregulated. How else would expect someone who was tried, convicted, jailed, blacklisted and then deported to Kenya to come  back here and perpetrate the same crime  unnoticed?” he asks in reference to the man behind the Simple Homes  story.

So, what is the solution?

Ms Njeri says what’s needed is a three-tier plan that will depend on the ability and willingness of the government, the industry and investors to co-operate. First, the government, through its regulatory organs, should seal the loopholes in the regulatory procedures.

Second, the real estate sector should come up with measures for self-regulation.

“They should watchdog each other because  when one firm goes under because of its unprofessional behaviour, it affects the whole industry and scares away both local and foreign investors,” she says.

CONVEYANCE LAWYER

Indeed, it was reported that many foreign investors had put their money in the Simple Homes  project, and it is doubtful that they will want to invest in another project in the country. 

Third, and most important, Ms Njeri says, is the need for investors to change their attitude. Many people do not know the procedures to follow regarding land transactions.

They do not do due diligence and because land has been touted as the ultimate investment, they are too impatient to wait for the process to be completed . Others believe they can represent themselves so they see no point in hiring a conveyance lawyer.   As a result they lose everything,” she says.

However, Mr Gikonyo, says you must be careful when choosing a lawyer: “Some lawyers are dishonest and will swindle you or collude with the company to swindle you.” he says, adding that to  avoid this, look for a registered lawyer who will do all the due diligence for you and also ensure that  all contracts are in writing.

Ultimately, Ms Njeri says, the best way to avoid being conned is to be cautious and follow all the laid-down procedures.