DUE DILIGENCE REPORT IN REPSECT OF FLAT NUMBER D26 – 256

AT LANGATA HIGHRISE PHASE II

______________________________________________________________________________

PREPARED BY:

HEAD OFFICE
TOP LAW CENTRE
31/33 MUTHITHIROAD
P.O BOX 33223-00600, NAIROBI
www.sichangi.com
conveyance@sichangi.com
(Our Ref: BASEL/BOA/93/17)
BACKGROUND SCOPE & METHODOLOGY
Background
A. Sichangi Partners Advocates (SPA) has been instructed by Bank of Africa Kenya
Limited (―The Bank‖) to conduct a legal due diligence in respect of Flat Number D26-
256 Langata Highrise Phase II (the “Property”) developed by National Housing
Corporation (the “Head Lessor”) and thereby assigned to Hellen Nyambura Maina
(the „Seller”) who is in turn Selling it to one Elizabeth Wangechi (the “Buyer‖) and
assigning the proceeds of the Sale towards reduction of the Principal Mortgage
amount of Kshs. 14,100,000 advanced by the Bank.

B. To this end, SPA has undertaken a search and inspected the title documents in respect
of the Property and this report (the „„Report‟‟) sets out key issues arising from our
review of the information and documentation provided to us by both the Seller and
the National Housing Corporation.

SCOPE AND METHODOLOGY

1.1 In preparing this Report, we have relied on the materials and information provided to us
by the Seller as well as the National Housing Corporation. It is appropriate that we set
out the assumptions on which the information contained in this Report has been
collected and presented. These are that:
a) this Report is limited to information that was provided to us by the Bank and the
Seller and their representatives;
b) this Report is limited to matters relating to the Property;
c) this Report does not advise on the commercial nature or effect of the proposed
transaction;
d) where we reviewed copies of documents we assumed that the copies were true and
complete and that, in the case of agreements, they have not (unless otherwise
expressly stated in this Report been terminated or amended;
e) We have assumed that all information or documentation supplied to us or examined
by us in connection with the preparation of this Report was and remains true and
complete and not misleading in any way.
1.2 This Report and the review of agreements and documentation contained herein is
limited to matters of Kenyan law.
 1.3 We do not accept liability to any party for any claim arising from any negligence,
misrepresentation or willful default perpetrated by any of the people from whom we
have obtained information.
1.4 This Report is strictly confidential for the benefit of the Bank and may not be transmitted
to and may not be relied upon in any way by any other party other than the Bank
without the prior written consent of SPA. SPA will not be responsible to or accept any
liability to any unauthorized third party.

DEFINITIONS AND INTERPRETATION

In this Report (including the sections appearing before this Section) unless the context
otherwise requires:
3.1 ―Bank” means the Bank of Africa Kenya Limited;
3.2 “Lands Act” means the Lands Act Number 6 of 2012;
3.3 ―Land Registration Act‖ means the Land Registration Act Number 3 of 2012 ;
3.4 ―Government‖ means the Government of the Republic of Kenya;
3.5 “KRA” means the Kenya Revenue Authority;
3.6 “Property” dwelling Flat Number D26—256 located at Langata Highrise Phase II
registered as means Nairobi/ Block 106/252/26.
3.7 “Report” means this due diligence report; and
3.8 References to Parts, Sections, Paragraphs and Appendices, are to be construed as
references to the parts, sections, and paragraphs of and the appendices to this
Report;
3.9 The expression person includes a natural person, body corporate, unincorporated
body, state, state agency, governmental authority or firm.

THE PROPERTY
4.1. The Property is identified by its Sectional Title Number Nairobi/ Block 106/252/26 and as
dwelling Flat Number D26—256 located at Langata Highrise Phase II within the County of
Nairobi.
4.2. It measures 103.985 square meters and it is registered to the National Housing
Corporation and the current User of the Property is Residential.
 HISTORY OF THE PROPERTY
5.1. Pursuant to a Tenant Purchase Agreement dated 22nd February 2011, the property was
initially sold to one Joel Muthunga Wanyoike.
5.2. Subsequently, Joel Muthunga Wanyoike executed a Deed of Assignment on 17th December
2014 assigning his rights under the Tenant Purchase Agreement to the Seller.
5.3. The Title in respect of the Property herein had not yet been transferred to the then seller
and the parties therefore opted to proceed by way of assigning rights over the Property to
the Seller.

NATURE OF CURRENT PROPRIETOR'S RIGHT OVER THE PROPERTY

6.1 The tenure of the Property is Leasehold and it takes the form of a sectional title under the
Sectional Properties Act.
6.2 The property having been sold by way of assignment, we have confirmed that the Head
Lessor’s consent was obtained as required under clause 7 (b) of the Tenant Purchase
Agreement. This is evidenced by the fact that the Deed of Assignment is executed on behalf
of the Corporation.
6.3 A Search at the Lands Registry has confirmed that the National Housing Corporation is the
registered proprietor of the Property. Bearing in mind the provisions of the Tenant
Purchase Agreement, the Seller would have the right to assign the Property to the Buyer;
the previous assignment would also be proper.

EXISTING ENCUMBRANCES
7.1. Following an Official Search conducted at the Nairobi Lands Registry, we have found that
there are no existing encumbrances whether in the form of a charge, caveat, inhibition or
prohibition registered over the property.

SUMMARY OF REGULATORY REQUIREMENTS

8.1. SELLER‟S OBLIGATIONS
8.1.1. CAPITAL GAINS TAX
Capital gains tax is charged on the net gains made from property by the transferor (seller).
However, the Property herein will fall under the exemption being a residential property
which the seller has occupied for at least three years before the transfer. As Capital Gains
Tax will usually be collected on or before the date of lodgment of application documents
 for transfer of property at the Lands Registry, the exemption ought to be sought and
provided before registration of the transfer in favour of the Buyer or such end-buyer as the
case may be.

8.1.2. RATES AND RENT CLEARANCE CERTIFICATE

Pursuant to Section 38 and 39 of the Land Registration Act, No 3 of 2012, it is the duty of
the Vendor to procure a current rates and rent clearance certificate at the time of
completion to enable the Registrar transfer the Property to the Purchaser.

Default in payment of land rates and rents may result in the forfeiture of the leases of the
properties by the Government or auctioning of the properties by the applicable County
Government.

8.1.3. CONSENT TO TRANFER

As the registered proprietor of the Property is still National Housing Corporation, the
Corporation’s consent to transfer is required before the assignment of the Property to the
Buyer.

Since the Property is a leasehold, consent to transfer ought to be obtained for the transfer of
the Property.

Spousal consent will not be required as the Seller is single. However, a statutory
declaration on the marital status of the Seller will be required to confirm that she is indeed
unmarried.

8.2. PURCHASER‟S OBLIGATIONS

8.2.1. STAMP DUTY
Payment of Stamp duty is done after valuation of the property by a government valuer.
The Stamp Duty Act (Cap 480) Laws of Kenya designates various conveyancing
instruments to be stamped. Section 5 of the said Act demands that every instrument
relating to property in Kenya, if specified in the Schedule to the said Act should fetch
stamp duty as prescribed. The duty is to be paid within 30 days of execution of the
document or of its receipt if it is executed outside Kenya (Section 6).
Section 46 of the Land Registration Act supplements the Stamp Duty Act and under the
Section no document is acceptable for registration if the stamp duty required to be paid
has not been duly paid and documents properly stamped. Duty on conveyancing
instruments is paid ad valorem at the statutory rate. The current rates are: Transfers – 4%
for properties situate within cities municipalities and 2% of the value for properties
outside municipalities/cities.

QUALIFICATIONS
This Report and the review of agreements and documentation is limited to matters of
Kenyan law and even where a document or matter reviewed is governed by a foreign law
we are not reporting on and express no opinion with respect to the laws of any other
jurisdiction.

We do not accept liability to any party for any claim arising from any negligence,
misrepresentation or willful default perpetrated by any of the people from whom we have
obtained information.

CONCLUSION
In conclusion therefore, the salient issues that we have identified in the course of our
investigations are as follows:
a. That the Seller is the beneficial owner of the Property;
b. That the National Housing Corporation is the registered owner of the Property and
a Sectional Title has been issued to that effect;
c. That the Property having been assigned to the Seller she can validly contract for its
assignment to the Buyer subject to the Consent of the National Housing
Corporation; and
d. That there are no encumbrances currently registered on the property.
PREPARED BY:

HEAD OFFICE
TOP LAW CENTRE
31/33 MUTHITHI ROAD
P.O BOX 33223-00600, NAIROBI
www.sichangi.com
conveyance@sichangi.com
(Our Ref: BASEL/BOA/93/17)