The 5 Key Things You Need To Do Before Leasing Land I

The 5 Key Things You Need To Do Before Leasing Land In Kenya

Before you enter into an agreement for leasing land in Kenya, it is essential that you have a clear understanding of the nature of the undertaking you are committing to get into. 

Find Property in Uasin Gishu County

Baoriat Agencies

Call: +254 721-554-937

Here are 5 things to consider before leasing a land:

# 1. Search For The Property

Now that you have established that you want to lease land for commercial reasons you will go to the market to find potential lessors willing to lease to you land suitable for your purposes. You will have identified the why (usually the reason for which you want to lease like say an agri-business) and the when (when you wish to commence operations and for how long you want to run the lease). And once you find potential lessors, you will negotiate some basic terms before hashing out a final agreement.  
You can source for information from a wide variety of sources including the internet, newspapers and other publications, property agents, lawyers, local administrators and many others.

#2. Undertake Due Diligence

 Undertaking due diligence can said to be the process of establishing whether the person giving you the “thing” has the capacity to do so. While the principle largely relates to contracts of sale, in the case of leases, it is relevant.
This process should help you clarify and ascertain the following:

• The Who: Who exactly owns the land you intend to lease

• The What: What are you leasing and exactly how much acreage are you receiving?

• The Where: Where exactly is the land you are leasing situated?

If you are going to have commercial interests established on a piece of land, it behooves you, the investor, to ensure that that interest is protected. It starts with a keen undertaking of due diligence measures.

#3. Have a Written Agreement

While certain oral agreements can be recognized by law in the event of a dispute, there may be finer points within the agreement that can only be clarified by having a written agreement. It is therefore good practice to always have a written lease agreement.
The preference for a written agreement would really be to ensure strict adherence to what was discussed and concluded by both parties but it also favors you who is taking on the lease by ensuring that your rights are recognizable in defense against an owner who may seek to renege on your agreement.
A written agreement also precludes messy oral arguments outside of what was agreed upon and recorded. The law only recognizes oral leases that do not exceed a two year, non-renewable term. The agreement will cover much wider terms other than price and duration to include issues such as assignment of responsibility for government levies (ground rent and rates in the case of leasehold land), maintenance, removals as well as any other responsibilities, termination of the agreement, assignment of costs for restoration of the property, payment of registration fees and much more.
A written agreement helps the parties to go over and beyond the legally implied rights and responsibilities.

#4. Register Your Lease Agreement

If you are entering into a lease agreement that is, at the minimum, a two-year renewable lease agreement, then it is important to have the lease registered under the relevant land registry. 
Get professional assistance to have the terms and conditions of the agreement brought into resolution with the lessor. If you want to exercise the option of renewing the lease at the end of the term or to have the first right of purchase in the event that the lessor wants to sell the land at the end of the lease period, it is important to ensure that the lease is registered.

Find Property in Uasin Gishu County

Baoriat Agencies

Call: +254 721-554-937

The reason for registration of leases is for the protection of both the lessor and lessee’s rights to be duly noted with the implied rights, duties and obligations of both parties taking precedence. In the event, for example, that a landowner is declared bankrupt or dies, a registered lease may serve the purpose of recognizing and protecting the rights of the lessee when a trustee to the bankrupt person or administrators to the estate of the deceased lessor are appointed.
For the purpose of registration, leases that have a duration of for 25+ years are treated in much the same way as transfers, with stamp duty payable at the applicable rates for transfers.
Ultimately, however, even with a registered lease, the rights of ownership still vests with the lessor so that, for example, the lessees may not sublet the land without the authority of the lessor

#5. Create an Exit Plan

It is rarely considered at the beginning of a venture to have an exit plan or to plan too many steps ahead of all the details that need to be sorted out at the time you are entering into the lease agreement. 

However, it is smart practice to have a clear sense of the end from the beginning, especially for commercial reasons. One of the implied conditions on expiry of a lease is that the lessee will hand over possession of the land in the condition in which it was delivered to him by the lessor. 

While this may be provided for in the registered lease agreement, it is important to consider clearly and plan ahead for the exit, which will include planning for what happens to any improvements you may have added on to the land in the time you were leasing it, and the costs associated with returning the land back to the condition in which it was originally handed to you, the lessee.
Your exit plan simply provides for the period immediately prior to disengagement with the lessor.

Find Property in Uasin Gishu County

Baoriat Agencies

Call: +254 721-554-937

Written by: Boaz Bett