Avoid Being Conned While Investing In Property

Many Kenyans and non- Kenyans have fallen prey to unscrupulous property dealers and conmen posing as property owners or brokers. In the process, they have lost a lot of money, crippling them financially. In some instances, this has led to conflicts with family members, partners or other business associates and in others, illnesses and death. It has affected persons from all spheres of life, some rich and others poor, some learned and others not so learned. Also, it cuts across all types of properties – urban, rural, agricultural, residential and commercial.

To avoid or reduce the chances of being conned, there are some simple precautions that one can take. Let’s now look at what I consider as the top ten precautions:

1) KNOW YOUR AGENT/BROKER

The first person you are likely to meet when buying a property is a property agent or a property broker. It is important that you carry out an investigation of who you are dealing with. There are many people who pretend to be property agents. How do you tell who is genuine and who is not? First, you should get the identification of the person. Request to see his identity card and make a copy for your reference. Also, get to know where they operate from. For instance, do they have an office? It is not okay to negotiate for properties worth millions of shillings from a restaurant or on the road side. Are they registered to practise as estate agents – ask for a copy of their registration certificate and also confirm the registration with the Estate Agents Registration Board. All registered estate agents are gazetted at the beginning of every year, so obtain a copy of the Kenya gazette. It is easily accessible in the internet. You can also ask your agent to show you a copy. If possible, get a photo of the agent. It might help you to identify him or her in future if it becomes necessary.

2) KNOW THE SELLER

It is absolutely critical that you know your seller even if you are transacting through lawyers. Do not buy the agent’s excuse that it is not possible to meet the seller, as sometimes they will make you believe. It isonly in exceptional cases where the seller might not be in a position to meet the buyer and even in those cases, the agent or the advocate should be in a position to make a full disclosure of the seller’s details, which you can proceed to verify. Once you have their details, identification card or passport, they should be counterchecked at the Registrar of Persons or at the immigration department. If the seller is a company, get a copy of their registration certificate and carry out the check at the Registrar of Companies. Whenever possible, arrange for a face to face meeting with the seller. Get to know what the sellers do. Where do they work? Do they have an office? Where do they live? Learn as much as you can about them.

3) KNOW THE PROPERTY

When buying a property, you should obtain all the details relating to it. Obtain a copy of the Certificate of Title or Certificate of Lease. In the case of a Certificate of Lease, ask your agent, owner or lawyer to also give you the lease document. This is important because it is in the lease where its conditions are recorded. Once you obtain the documents, you can proceed to carry out a due diligence on the property. An official search is important and this should be done by you or someone you trust, agent or lawyer. Even if the agent or seller brings a recent search, you should also carry out one. You can also talk to the neighbours – especially in developed areas. Most neighbours know each other and they know whom the property belongs to. They even know where there are disputes. You can also talk to the administrators. The local administrators – sub chief , chief or the sub county commissioner are good sources of information. For those who may be wondering, these offices exist even in urban areas. There was a time I was offered an urban plot at an extremely good price and this made me suspicious. The agent was so persistent and was even willing to accompany me to the DO’s office to verify. Unfortunately, when we went to see the DO, he strongly cautioned us against proceeding with the purchase as there was a court case and an injunction on the plot. Try and get a history on the property like who the previous owner was. These details are normally available in the correspondence file for the property. Also check other documents ( like the Ndungu Report) and confirm that the property was not a public utility earmarked for repossession or set aside for a public utility like a road. If you suspect that the land is part of road reserve, check with KENHA or KURA. You must buy a survey map of the property. This is the only way to ascertain that the land exists on the ground. Ever heard of ‘flying titles’? Then engage a licensed surveyor to confirm the beacons and the size of land. In summary, you must satisfy yourself that you are buying a legitimate piece of land that exists physically and on paper and one that has no controversy.

4) KNOW THE PRICE

It is good practice to independently establish the price of the property that you are interested in. You can do this by engaging the services of a registered valuer. Although it will cost you a fee, you might end up saving a lot of money in negotiations. You also have the comfort of knowing that you are paying the correct price. Most property brokers ( and especially the unregistered ones) will quote higher prices than the ones in the market. In some instances, they have negotiated a price with the owners and then loaded their own commission over and above the selling price. Establishing the market price will therefore help you negotiate a better deal.

5) AVOID PAYING MONEY DIRECTLY TO THE PURCHASER

Buying a property is a process that takes on average 90 days. Many sale contracts will include payment of a deposit. Property sellers ideally should not be paid any money directly until the transfer of the property is effected. The best way is to deposit any money paid as deposit with a registered estate agent or an advocate. The agent or the advocate will hold the money in a client account on behalf of the parties “ as stakeholders” and provide a guarantee to the seller that the money will be transferred to his or her account on completion of the sale. This way, your money is safe and should the sale fail, it will be reimbursed. A lot of sellers will present pressing needs as to why they need the money. For example, some will say they need to clear rates and ground rent arrears to obtain clearances or other family needs. Remember, the property is not yours until the transfer has been done. I had a case where a buyer paid rates directly to the City Council because there was a threat that the property would be auctioned only for the seller to turn around and refuse to sell the property. When the matter went to court, the seller said he no longer wished to sell the property but would reimburse the buyer the money in instalments!

6) AVOID CASH PAYMENTS

Most conmen will insist on cash payments especially the deposit. This helps remove any paper trail where you can obtain their details through the banks. Some are not even interested in the full purchase price. Once they get a deposit in cash, they go underground. Payment by cheques or bank transfer is more ideal. It will help you trace the person if the deal fails.

7) LEGAL ADVISE

Engage a lawyer to draw a sale agreement for you and assist in the transfer. Although this will cost you a fee, it will safeguard your interests. Professional services should be embraced and not shunned. The professionals are conversant with sale processes and details that you may not be aware of hence protecting your interests.

8 OUTSTANDING STATUTORY PAYMENTS AND OTHER DUES

A search on the property will show you if the property has any encumbrances like bank loans, any cautions or inhibitions. Please note that some of these must be cleared before a transfer is registered and it is good to engage the seller on how they intend to do this. For example, you will require a rent and rates clearance certificates which you cannot obtain until you are cleared by the respective county governments. Some processes can take long to clear and this affects the sale period. Also, ensure that the electricity and water accounts are up to date.

9) BE PATIENT

You should not be in a hurry to close a deal. Conmen are very smart and smooth talkers. They will always claim that there are other interested parties who are almost closing the deal to create a sense of urgency on the buyer to make a commitment. You should resist any attempts to be rushed into an agreement before you have satisfied yourself that everything is in order.

10) FOLLOW YOUR GUT FEELING

If a deal feels wrong, it probably is. You should walk away from a deal that doesn’t seem right even if the broker or agent tries to convince you otherwise. Sometimes, it is difficult to pinpoint what the issue is but if you have any discomfort, look for another property. It will save you a lot of tears later on.