A Practical Introduction to Property Due Diligence in Kenya

Buying property, whether a family home, an investment, or business premises, is a significant decision. Property due diligence is the process of gathering and reviewing information about a property so that a buyer can make that decision with a clearer understanding of what they are acquiring.

This article offers a general introduction. The specific steps, searches, and documents relevant to a transaction will depend on the type of property and its circumstances, and should be confirmed with a qualified advocate.

Why timing matters

Due diligence is most useful when it is carried out before a buyer has made a binding commitment or paid a substantial deposit. At that stage, any concerns can be raised, clarified, or used to renegotiate. Once commitments have been made, the options may be more limited.

What due diligence generally considers

Ownership

A central question is whether the person or entity selling the property is entitled to do so. This usually involves reviewing the title documents and the relevant official records, and confirming that the seller's details match.

Interests and encumbrances

Property may be subject to interests held by others, such as a charge in favour of a lender, a lease, or another registered restriction. A buyer will want to know about these and understand how they will be dealt with before completion.

Physical inspection and boundaries

Documents should be compared with the property on the ground. Does the land or building match the description? Are the boundaries clear? Is anyone occupying the property? A physical inspection, and in some cases a survey, can reveal issues that do not appear on paper.

Permitted use and approvals

Buyers should consider whether the property can be used for their intended purpose and whether any buildings on it have the necessary approvals. This is particularly relevant where a buyer intends to develop or change the use of the property.

Outstanding charges

It is also prudent to confirm whether any amounts are outstanding in connection with the property, such as rates or service charges, and how they will be settled.

Practical suggestions for buyers

• Seek advice before signing an offer letter or paying a deposit.
• Ask for copies of the title and other key documents early.
• Visit the property, ideally more than once.
• Be cautious if you are asked to pay quickly or into an account that does not belong to the seller.
• Keep records of all payments and correspondence.