What is property due diligence?
This is the comprehensive background check to establish key details related to a property the buyer is interested in purchasing. There are two main ways in which a potential buyer can conduct property due diligence in Kenya. They include;
- Company selling land
- Property itself
Checklist to use during due diligence
- A copy of the title deed
- A copy of your ID
- Personal contact details
1. Due Diligence on the Company Selling Land
Purchasing land from a land-selling company is always a wise step. It comes with a number of advantages;
- Shoulders due diligence cost, survey cost, value additions cost, title processing costs, etc. on your behalf.
They present you with a ready investment opportunity.
- The land-selling company takes care of the documentation process on your behalf. This gives you peace of mind. After investing you sit back and wait for your title deed to be processed.
- You are sure that you are dealing with the landowner. Companies are keen on due diligence to ensure the land sold to clients is legally acquired and has a genuine title deed.
Buying from a company gives you the opportunity to interact with other investors interested in the same project. This gives you an opportunity to exchange ideas.
Get to know the company’s office location around the country. The projects they have successfully done. The total number of title deeds issued. Finally, valid identification documents of their staff members, etc.
Also, take time and go through their Social Media Pages, Website, and YouTube channel and listen to clients’ testimonials and other content that they prepare. You can go ahead and ask for a certificate of registration and a valid identification card from the staff selling you the property.
Also, get the original copy of the title deed and a certified copy of the land documents from the company.
2. Due Diligence on Property Itself
This is another part of due diligence that you need to focus on. Failure to undertake this may cost you your hard-earned money.
There are various ways to conduct this successfully.
Conduct a title deed search at the Land Registry
This is the act of retrieving information regarding the details both current and previous regarding a property before taking action.
Title deed search in Kenya can be done online on the Ardhisasa Platform if your property is within Nairobi County and manually for the rest of the properties in Kenya.
This will help you know who is the current owner of the property and whether they have the right to transfer the land to you.
Physically view the land
This is another important part of due diligence. If you are living in Kenya, take the time and view the land that is currently being sold.
By doing this you will be able to see the current occupation of the land whether it is vacant or there is an ongoing activity.
Secondly, you will be able to view the beacons for your land, and the neighboring areas. Additionally, you view the value additions such as a fence, gate, and grading of access roads.
Land Purchase Due Diligence Checklist
Purchasing land can be a significant investment, so it’s important to do your due diligence to ensure that you are making a well-informed decision. Here is a checklist of things to consider when conducting due diligence on a piece of land
1. Zoning and land use regulations
Make sure that the land is zoned for the intended use and that there are no restrictions or limitations on the use of the property. This information is usually available through the local government planning department.
2. Environmental concerns
Look into any potential environmental hazards on or near the property, such as wetlands, floodplains, or contaminated soils. This information can be found through the state environmental protection agency or a qualified environmental consultant.
3. Access and utility availability
Make sure that the property has legal and physical access and that utilities such as water, electricity, and sewer are available or can be easily connected to the property.
4. Surveys and boundaries
Ensure that the property boundaries have proper marks and that a survey of the property has been done well. This will help to ensure that there are no disputes over property lines in the future.
5. Property title deeds
Review the property’s title to ensure that there are no outstanding liens or judgments against the property. Obtain title insurance to protect yourself from any unknown liens or claims on the property.
6. Leases and easements
Check to see if there are any leases or easements on the property that could affect your use of the land.
7. Adjoining properties
Review the properties around the land you are considering purchasing, whether it is commercial, residential, or agricultural zones. If those adjoin your land, it will affect your future plans for the land.
8. Zoning and Development plans
Check with the local government about any plans for the area where the land is. It will give you a better understanding of any future developments, infrastructure projects, and impacts.
By thoroughly reviewing each of these items, you can gain a better understanding of the property and any potential issues that may arise. This will help you to make a good decision when purchasing land.
In conclusion, if you are living in the diaspora, ask for a video of the project, photos, and the exact location pin of the project. This will help you have a feel of the property you are investing in.
