What you need to do when buying property

The process of purchasing a property varies depending on the nature of the purchase. PHOTO | SHUTTERSTOCK    

Dear Cathy,

I want to buy my own office space and did due diligence on the property. The search results established that the seller owns the property and has a clean title to it. Could you please walk me through the process of the purchase transaction?

By CATHY MPUTHIA More by this Author

Collins.

The process of purchasing the property varies depending on the nature of the

purchase. For example, are you buying vacant land or an already-built office space? Are you buying the office off-plan?

Secondly, will you be self-financing or will be getting finance from a bank? I am sure that by now the seller has presented you with a letter of offer for the purchase of office space.

Before signing the dotted line, I recommend you do a checklist on the above parameters to get you ready for the purchase.

The biggest risk that purchasers face in transactions is a breach on their side due to non-payment of the stated price.

Before you sign the dotted line, you need to be sure where you will get the money to buy the office space. If you have it in cash then your risk exposure is very low.

However, where you intend to get a loan from a lender, you need to have that discussion with your lender before even committing to purchasing. Are you able to meet the lender’s terms and conditions? Think this through first.

Once you have a bit of certainty on the financing aspect then you can sign the letter of offer.

I assume that you have already done the search and verified that the seller has a good title. I advise you to get a lawyer to assist you with the legal documentation that follows.

Some of the legal documentation includes a letter of offer. Once both parties sign the letter of offer then you cannot opt out of the transaction without consent of the seller.

A sale agreement is the second document that follows and this is the document that governs the entire sales process. It contains details such as the purchase price and the terms of payment.

In most cases, the seller takes a deposit at the inception of the sale agreement then the buyer pays the balance either in instalments or on a certain date known as the completion date.

The seller’s main obligation is to transfer the property and as a result, there are certain documents known as completion documents, which he has to hand over to you on the completion date.

These documents will enable you to transfer the title to yourself.

Depending on the type of transaction, on the completion date, the seller should present you with the completion documents.

In most agreements, the purchaser deposits the balance of the purchase price with his lawyer who then issues a guarantee to the seller that he (the lawyer) will pay the balance once the title deed is received in your name.

On the strength of this guarantee then, the seller will release the completion documents to facilitate the change of title into your name.

As part of the completion documents, is the transfer document conveying the property to you. Tax is payable on every property transfer depending on the region.

For example, within Nairobi, property tax known as stamp duty is four percent of the purchase price.

Property tax is payable before the transfer can be done in your name.

Registration is done through the Ministry of Lands. When undertaking conveyancing, it is advisable to procure the services of a property lawyer as it is a very detailed and technical process.

Ms Mputhia is the founder of C Mputhia Advocates | cathymputhia@gmail.com