Land-buying companies face tough new rules to end fraud

Land for sale

A warning telling interested buyers to keep off a disputed piece of land in Kimbo Matangini, Ruiru, in March.

Photo credit: Francis Nderitu | Nation Media Group

Land-buying companies will face stricter regulations if MPs pass a bill aimed at protecting land-buyers from fraudsters.

The Land (Amendment) Bill, 2023, sponsored by Kirinyaga Central MP Joseph Gachoki, seeks to compel the firms to deposit Sh500 million with the Registrar of Companies as a bond.

The bill, which was published on Thursday last week, seeks to establish the Office of the Registrar of Land Dealing Companies, which will regulate the registration and licensing of the firms.

"The main objective of this bill is to amend the Land Act, 2012 to provide for the registration, licensing and regulation of land-dealing companies in order to protect the interest of persons who purchase land from such companies," the bill reads.

As part of the registration process, land-buying companies will be forced to declare their directors and shareholders, head office and address, and their national and international affiliations, if any. The move is aimed at weeding out briefcase companies.

"An application for registration shall be accompanied by a certified copy of the certificate of incorporation and a fee of not less than Sh500 million," the bill reads.

The registrar may reject an application if the firm has given false information to secure registration or for any other reason prescribed by a Cabinet Secretary. Where an application is rejected, the bill provides that the registrar shall be notified within 14 days.

The bill also empowers the registrar to cancel a certificate if it was obtained through misrepresentation or non-disclosure of facts or if the conditions attached to the certificate of registration have been breached.

"The registrar shall, before cancelling the certificate of a company, notify the company of the intended cancellation, state the reasons ... and give the company an opportunity to be heard," the bill states.

In 2021, the Directorate of Criminal Investigations deployed over 26 officers with skills in land surveying, land economics, physical planning and land administration to its Land Fraud Investigations Unit due to stem the rise in land fraud cases.

The unit deals with land sales to determine whether a piece of land has been legitimately acquired in order to increase the efficiency of transactions and reduce fraud.