by: Aluoch Owuora, Joan Mbodze & Haron Makhanu
Conveyancing is like a ladder, each rung seamlessly builds upon the last. If you miss a rung, you risk halting your ascent or even falling back to the beginning. If you happen to fall to the beginning, you are looking at damages. Alternatively, let us think of it as building a house: You cannot put up the roof without first laying a solid foundation – and a proper wall, for even if you have a solid foundation, you cannot put the roof on the foundation. You need a proper wall. Similarly, each stage of conveyancing must be adhered to in sequence to ensure a successful transfer of property and a clean title at the end of the transaction. One of these rungs, is the Agreement for Sale. Properly drafted, your will sail through the other rungs; but poorly drafted, Damnum will be your paramour at the foot of the ladder.
Agreement for Sale of Land
The sale and purchase of land in Kenya is not without blemish. Our judiciary is filled with so many land disputes. What is the root problem? David Angwenyi addressed this in “The Answer to The Land Question”. David said that we must solve the problem at its source. The Answer to the Land Question dealt with the problems attributed to the Land Tenure System and the interpretation and application given to the torrents land system by our Courts – The Supreme Court. David identified this as the root problem. There is however another root problem, or perhaps not a root problem, but which, if dealt with, can ensure a proper and smooth transaction – poorly drafted agreements for sale.
An agreement for Sale of Land in Kenya must be in writing. Section 3 of the Law of Contract sees to it that no suit can be brought and sustained where the agreement to sell land is not in writing, signed by both parties and attested to. But why must it be in writing? After all the Law of Contract, as we know it recognizes oral contracts. Doesn’t it?
The requirement to have the agreement for sale in writing is statutorily imposed by the Law of Contract Act (the “Act”). This Act was published as a Bill on 28th April 1959, before independence. It was debated in the Legislative Council (LegCo) and subjected to public participation. In those days, comments from the public were largely taken from the Law Society (Nairobi and Mombasa) and the Judiciary. The Bill came up for second reading on 26th October 1960. The Bill was subjected to a committee of the whole house on 27th October 1960. Several amendments were made to the Bill before it was subjected to a third reading on 28th October 1960 when it was passed.
The discussions in the legislative council did not touch on section 3(3) of the Law of Contract Act which introduced the requirement to have contracts in writing. Neither Mr. Conroy (the Temporary Minister for Legal Affairs,) nor Mr. Odinga (a representative to the LegCo), who were the avid debaters during the debate of the Act talked about section 3(3). In fact, the requirement to have a contract of land in writing in Kenya did not exist until the Law of Contract was amended by the Law of Contract (Amendment) Act, 1968. So, what was parliament in 1968 seeking to cure by including a statutory requirement that contracts affecting land must be in writing.
The answer to this is quite simple. Having a contract in writing gives it many attributes but which can be reduced into three: evidentiary, forensic and protection. It is evidence, on the face of it, that person A agreed to sell his land to person B who agreed to purchase it at a certain amount. It is forensic to the extent that each individual affixes their unique marks/thumbprint on the Agreement thus giving it capacity. It is protective to the extent that once person B buys property from person A, no other individual should lay claim to that property because of the warranties issued by person A which are in force.
Letter of offer: is it binding or not?
Questions abound as to whether a letter of offer is a contract by itself and as such binding. For the proponents of it being a contract and thus binding, it contains fundamental elements of a contract – an offer, acceptance, and consideration. For those who argue that it is not, they tend to suggest that it is merely an invitation to treat and as such, parties can walk scot free from such engagement despite them executing those letter of offers. To be intentional, they have included the term “subject to contract” to emphasize the notion that the letter of offer cannot materialize into a contract yet eventually an agreement for sale will be executed by them.
An Agreement for Sale therefore emerges as a cornerstone of securing interest in land. In essence, this legally binding document serves as a comprehensive roadmap for the entire transaction, outlining the rights, obligations, and expectations of both the purchaser and the vendor. While the Agreement for Sale may appear as a simple document outlining the transaction details, it plays a far more critical role. It acts as the binding contract, solidifying the commitments made by both parties and ensuring a smooth and transparent property transfer. This document serves not just as a record of the agreed terms of the contract, but as a cornerstone of security and legal protection throughout the entire endeavor. It is the holy grail of that particular transactin. It details the comandments that, if adhered to, will enable the Purchaser to get possession of the land promised by the Vendor; if not adhered to, the Purchaser will see the Land, but will not get it, promised or otherwise. Sacred!
What are the essential clauses in an agreement for sale?
A typical Agreement for Sale acts as a roadmap for the entire transaction. As a matter of best practice it should encompass, among others:
- Parties.
- Purchase Price.
- Interest being passed.
- Completion Date.
- Completion Documents.
- Possession.
- Warranties.
- Termination Clauses.
- Dispute resolution.
- Execution.
Conclusion
It is vital to emphasize that an Agreement for Sale forms the very foundation of a secure and successful conveyancing transaction. It is far more than just a formality in the conveyancing process. It is the Constitution, the Magna Carta, the Comandments of that particular transaction.; By prioritizing a well-drafted Agreement for Sale, free from ambiguity and loopholes, you can embark on the conveyancing journey with confidence, paving a way for a smooth property transfer, knowing your rights are protected and the path towards acquiring or selling your property is clearly defined.