Legal Alert: Impact of the Business Laws (Amendment) Act, 2020 on ease of registration of Transfers and leases in Kenya

On 20th March 2020, the long-awaited Business Laws (Amendment) Bill 2020 (The Act) became law. The key objective of the Act is to enhance the ease of doing business in Kenya in a bid to boost the country’s ranking in the World Bank Ease of Doing Business index.

As highlights, the Act effects changes in registration of conveyancing instruments as follows:

  1. E – stamping of documents

Stamp duty is a monetary rate charged on instruments as specified the schedule of the stamp Duty Act Cap 480 Laws of Kenya. Once stamp duty is paid to the Collector being Kenya Revenue Authority (KRA), the instrument is embossed or impressed by means of a dye or franking machine or an adhesive stamp.

Conveying instruments must be stamped within Thirty (30) days from the date of execution; otherwise interest for late payment will arise.

The Act has amended the Stamp Duty Act by introducing electronic stamping of instruments (e – stamping). The migration to the digital platform of e- stamping by the , the collector will take effect when the Cabinet Secretary for National Treasury formulates and enacts regulations with respect to e- stamping

  1. Land Rates and Rent clearance certificates together with consents have been abolished in registration

Prior to the enactment of the Business Law (Amendment) Act, it was a mandatory obligation in conveyancing for land rates to be paid for property within county and urban areas, municipalities and township areas in accordance with the Rating Act Cap 266 laws of Kenya. Land Rent was to be paid to either the National or county governments as the lessors for leasehold properties.

The Act, in a bid to ease registration of instruments transferring. Leasing and/ or Charging property, has abolished the statutory requirement under section 38 and 39 of the Land Registration Act No. 3 of 2015 (LRA) for submission of clearance certificates with respect to Land rates and rent. In addition, the Act has abolished the provision to submit consents in the disposition of Land

Indeed, this amendment to the LRA provisions on clearance certificates and consents will reduce the time, cost and expenses incurred in obtaining the said documents.  However, to protect would be Purchasers from inheriting the burden of unpaid land rates and rent arrears it shall be prudent for the Purchaser and appointed advocate to ensure that the sale agreement has a conditional clause on payment of land rates and rent prior to payment of the balance of the Purchase Price.

  1. Codification of electronic signatures (e- signatures)

The Act has codified electronic signatures on documents and further expanded the scope of execution of documents by validating the use of e- signatures in various statutes including the LRA. This is in tandem with the Ministry of Lands and Physical Planning push for digital revolution for conveyancing and registration to improve efficiencies.

E signatures in conveying instruments will be valid so long as the Parties consent to it. The Act adopts a pragmatic approach and does not prescribe any form or type of signature.

The foreseeable difficulty of e – signatures in real estate is first the legal requirement of physical witnessing and attestation of signatures under section 3 of the Law of Contract Cap 23 Laws of Kenya. Secondly, the uptake of e – signatures on cross – border transactions.  As such we opine there is a need for practical legislative reform with respective to witnessing and attestation in the digital platform. For instance, is it sufficient to have video witnessing?

 

Despite the said quagmire of attestation and witnessing of e – signatures, with respect to registration of instruments electronically executed, the Registrar has been conferred the discretionary power to dispense with verification of the e-signature

 

 

 

 

This Alert is issued for informational purposes only and is not intended to be construed or used as general legal advice nor as a solicitation of any type. Should you need any assistance or want any queries answered on the issues discussed in this alert, please get in touch through e-mail: conveyancing@muchemiadvocates.com