Further to our Land Law Updates Alert issued on 16th September 2016, we set out below 10 key changes introduced by the new Land Legislation:
- Spousal consent
Section 31 of the Land Laws (Amendment) Act, 2016 (the “LLA”) deletes section 93 of the Land Registration Act, 2012 (the “LRA”) (Co-ownership and other relationships between spouses) and replaces it with a single paragraph providing that if a spouse obtains an interest in land during the subsistence of a marriage for the co-ownership and use of both spouses, such property shall be deemed to be matrimonial property and shall be dealt with under the Matrimonial Property Act, 2013 (the “MPA”).
Matrimonial Property is now defined under the LRA to mean any interest in land or lease that is acquired by a spouse or spouses during the subsistence of a marriage. This is distinguished from matrimonial home which is defined under the Act to mean “any interest in land that is owned or leased by one or both spouses and occupied by the spouses as their family home”. Important to note are:
- previously section 93 (3) of the LRA imposed a duty on a lender or transferee to inquire of the borrower or transferor, respectively, on whether the borrower’s or transferor’s spouse(s) has consented to the charge or transfer where the borrower or transferor held the land or dwelling house in his or her name individually. Although the the duty imposed on the lender and transferee is removed with this amendment in the LRA, the consent of both spouses is still required under section 12 (1) of the MPA in the case of any alienation of matrimonial property (whether by way of sale, gift, lease, charge or otherwise) during the subsistence of a monogamous marriage. Under section 12 (5) of the MPA, written and informed consent of both spouses is also required in case of a disposition in the form of a lease or charge over a matrimonial home;
- Section 79 (3) of the Land Act, 2012 (“LA”) has not been amended. This section provides as follows:
“A charge of a matrimonial home, shall be valid only if any document or form used in applying for such a charge, or used to grant the charge, is executed by the chargor and any spouse of the chargor living in that matrimonial home, or there is evidence from the document that it has been assented to by all such persons”
- the following presumptions in respect of matrimonial property apply under section 14 of the MPA where matrimonial property is acquired during marriage in the name of one spouse, there shall be a rebuttable presumption that the property is held in trust for the other spouse; and where matrimonial property is acquired during marriage in the names of the spouses jointly, there shall be rebuttable presumption that their beneficial interests in the matrimonial property are equal.
Arising from the above, spousal consent to charge, lease, and transfer or otherwise dispose of land should be obtained over:
- The matrimonial home as defined in the LA (i.e. the home occupied by the spouses as the family home); and
- All property acquired by a spouse during the subsistence of a marriage.
- Overriding interest
Section 11 of the LLA amends section 28 of the LRA by deleting subsections (a) and (f). This means that the following are no longer automatically deemed to be overriding interests over registered land without their being noted on the register:-
a) Spousal rights over matrimonial property;
b) Leases or agreements for leases for a term not exceeding two years; and
c) Periodic tenancies and indeterminate tenancies.
- Retrospective effect of the LA
Section 60 of the LLA amends section 78 (1) of the LA which provided that Part VII of the LA (General Provisions on Charges) applied to charges made before the coming into effect of the LA. The words “including any charge made before the coming into effect of this Act and in effect at that time, any other charges of the land which are specifically referred to in this Part” have been deleted. The effect of this is that:
- Any charge, mortgage or other security instrument which was valid before the commencement of the LA shall continue to be valid in accordance with its terms; and
- The provisions relating to the realization of any charge, mortgage or other instrument created before the commencement of the LA shall apply save for the requirement to serve notice to spouses as well as to other persons who were not required to be served under the repealed Acts.
This amendment resolves the controversy in respect of the application of section 78 (1) of the LA to charges that were registered before the LA came into force.
- Government Lands Act (“GLA”) and Land Titles Act (“LTA”) register
Section 35 of the LLA amends section 105 (c) of the LRA being the transition provision in respect of titles of parcels of land comprised in a register kept under the repealed GLA and LTA. The entire subsection (c) is deleted and substituted with a new clause confirming inter alia that the register or folio maintained under the GLA and LTA in respect of interest in land shall be deemed to be the register under the LRA.
- Execution and attestation of instruments of disposition by a corporate body
Section 18 of the LLA amends section 44 of the LRA by deleting subsection (3) and (4) dealing with execution of instruments of disposition by corporate bodies and execution of instruments in a foreign country, respectively, and substitutes the same with new subsections with the following changes:
- If there is a relevant law applicable prescribing how a corporate body ought to execute such instrument, that law would apply in the first instance. In the absence of provisions on execution of instruments of disposition by a corporate body, execution should be effected in the presence of either an advocate of the High Court of Kenya, a magistrate, a Judge or a notary public.
- The distinction between execution of instruments of disposition in a foreign country within the Commonwealth and in a foreign country not within the Commonwealth has been deleted and replaced with a new provision applying generally to execution of instruments outside Kenya to the effect that attestation by a notary public would suffice. This is less cumbersome and/or a relief to parties executing documents in countries that are not members of the Commonwealth as they were previously required to sign at the Kenyan Embassy in that country before an official offering consular services.
- Joint tenancy
Section 29 (d) of the LLA amends section 91 of the LRA by deleting subsection (8) which limited joint tenancy to only between spouses, except with leave of the court. There is therefore no longer a restriction as to who can create a joint tenancy.
- Order of priority of charges
Section 62 of the LLA amends section 81 (1) of the LA by removing the mandatory effect of that section that charges shall rank according to the order in which they are registered and now provides that the ranking order as prescribed shall not apply if the charge provides otherwise.
In addition, subsection 4 has been deleted and replaced with a new provision to the effect that if a chargee holding a charge created subsequent in time to one in favour of a prior chargee, lends money on the security of the charge to a chargor and it later transpires that the prior chargee or the chargor himself acted dishonestly or fraudulently in procuring the prior charge, the prior chargee’s right to repayment under the charge shall be postponed to the rights of the subsequent charge.
New subsections (5) to (10) have been introduced with detailed provisions on priority of documents presented for registration.
- Default notice in respect of a charge
Section 67 (b) of the LLA amends section 90 (3) of the LA (Remedies of a Chargee). The notice period within which a chargor who is in default of his/its obligations under a charge ought to remedy the default has now been revised from two months to ninety days. The intention here is to cure the divergent opinions in respect of the applicable notice period but we note that the time frame prescribed in section 90 (2) (c), being two months, has not been adjusted.
- Penalty for delayed application for registration
Section 14 (a) of the of the LLA amends section 36 of the LRA by deleting subsection (4) and replacing it with a new subsection 4 which now requires an instrument of disposition to be presented for registration within three (3) months from the date of the instrument. Late submission will attract additional fee equal to the registration fee that shall be payable for each of the three (3) months which have elapsed since the date of the instrument. There is a proviso that such additional fee shall not exceed two times the original fee payable.
- Ranking of interests appearing in the register
Section 14 (b) of the of the LLA amends section 36 of the LRA by inserting a new subsection which prescribes that interests appearing in the register (i.e. land register and community land register) shall have priority according to the order in which the instruments which led to their registration were presented to the registry, irrespective of the dates of the instruments and notwithstanding that the actual entry in the register may be delayed.
We shall provide further insights as we continue to review the amendments