Process of registering charges for personal properties.

Introduction.

Charges are legal claims, obligations, or financial liabilities attached to a property. They create a right or interest in the property other than conferring absolute ownership to the land. They are created by the chargor or mortgagor usually a person in need of urgent loan in favour of the chargee or mortgagee usually a lending or financial institution to secure debt or loans whereby the chargor gives his property to serve as security to the loan. It involves the following steps:-

1. Agreement to enter into the financial relationship. The Chargor (borrower) together with the chargee (lending entity) firstly enters into a financial contractual agreement whereby the chargor undertakes to give his land as security with respect to the loan he intends to take from the chargee.
2. Conducting an Official Title Search. This step involves reviewing the property’s title to verify the true owner objectively to confirm that the person initiating the charge is the rightful owner of the land. Search also aids in Identifying encumbrances such as restrictions, cautions or other charges.
3. Drafting the Instrument of Charge. LRA Form 53 is the legal document that details the terms of the charge and forms the basis of the agreement between the chargor and the chargee. It contains the terms agreed upon by both the lender and the property owner.
4. Execution of the Charge. Execution involves Signing the charge instrument by the chargor and the charge, Proper attestation or witnessing and ensuring Compliance with all legal formalities required for validity
5. Obtaining Necessary Consents and Clearances. For Leasehold Properties, Consent from the lessor is required, along with a Land Rent Clearance Certificate. For Agricultural Land, approval from the Land Control Board is necessary. For matrimonial properties, spousal consent is necessary.
6. Stamp Duty Assessment and Payment. It’s calculated at 0.1% of the loan amount. Once the stamp duty is assessed, prompt payment is required.
7. Lodging at the Lands Registry for registration. After the stamp duty is paid, the Instrument of Charge is lodged at the Lands Registry for registration. The register is amended to reflect the new encumbrance in the property.

At Siyasa and Company Advocates, we offer expertise and professional legal services to our clients who want to charge properties for the purpose of securing various commercial transactions. We have a seasoned, competent and esteemed team ready to serve you diligently. Conduct us for further advise.

Disclaimer: “This article is for informational purposes only and does not constitute legal advice. For inquiries, please contact Siyasa and Company Advocates.”

-Contributed by-

-Francis Kitheka-