Understanding Property Transfer in Kenya: A Practical Legal Guide

Property ownership is one of the most significant investments an individual can make in Kenya. However, transferring land or property is not simply a private agreement between a buyer and seller—it is a formal legal process regulated by Kenyan law to ensure security of ownership, prevent fraud, and protect all parties involved.

This article explains the legal framework, key documents, and process of property transfer in Kenya in simple, practical terms.

1. Legal Framework Governing Property Transfers in Kenya

Property transfers in Kenya are primarily governed by:

• The Land Act, 2012
• The Land Registration Act, 2012
• The Matrimonial Property Act, 2013
• The Stamp Duty Act
• Relevant County Government laws (for rates and land use control)

These laws ensure that land transactions are transparent, legally binding, and properly recorded in government registries.

2. What is a Property Transfer?

A property transfer is the legal process through which ownership of land or property changes from one person (the transferor) to another (the transferee). The transfer is only complete once it is registered at the Lands Registry or through the Ardhisasa system, making the buyer the lawful owner.

3. Key Documents Required in a Property Transfer

For a valid transfer to take place, several documents must be prepared and verified:

A. Ownership and Transaction Documents

• Original Title Deed or Certificate of Lease
• Sale Agreement signed by both parties
• Transfer Form (LRA Form 33), duly completed and witnessed

B. Legal Consents and Approvals

• Land Control Board (LCB) Consent (for agricultural land)
• Spousal Consent (if the property is matrimonial property)
• Registered Power of Attorney (if one party is represented)

C. Clearance Certificates

• Land Rates Clearance Certificate (County Government)
• Land Rent Clearance Certificate (Ministry of Lands for leasehold land)

D. Tax and Valuation Documents

• Stamp Duty Valuation Report
• Proof of Stamp Duty Payment (KRA receipt)
• KRA PIN certificates for both buyer and seller

E. Identification and Supporting Documents

• National ID or Passport copies
• Passport-size photographs
• Company documents (if a company is involved, such as CR12 and board resolution)

4. Step-by-Step Property Transfer Process

Step 1: Conduct Official Land Search

A search is carried out at the Lands Registry or Ardhisasa platform to confirm ownership and check for any encumbrances such as charges or court orders.

Step 2: Sign Sale Agreement

Both parties sign a legally binding agreement outlining price, payment terms, and completion timelines.

Step 3: Obtain Required Consents

Necessary approvals such as Land Control Board consent (for agricultural land) are obtained.

Step 4: Pay Stamp Duty

The property is valued, and stamp duty is assessed and paid to the Kenya Revenue Authority (KRA).

Step 5: Prepare Transfer Documents

The transfer form is completed, signed, and witnessed by an advocate.

Step 6: Registration of Transfer

Documents are submitted to the Lands Registry or processed through Ardhisasa for registration.

Step 7: Issuance of New Title

Once approved, the buyer is issued with a new title deed or certificate of lease.

5. Importance of Proper Property Transfer

A properly executed transfer ensures:

• Legal ownership protection
• Prevention of fraud and land disputes
• Recognition by government authorities
• Secure investment for the buyer
• Smooth future sale or inheritance

6. Common Risks in Property Transfers

• Fake or forged title deeds
• Double sales of land
• Lack of spousal consent leading to disputes
• Unpaid land rates or rent
• Failure to register transfer documents

7. The Role of Digital Systems (Ardhisasa)

Kenya’s Ardhisasa platform has modernised land administration by:

• Digitising land records
• Reducing fraud and duplication
• Speeding up searches and transfers
• Improving transparency in land transactions

Conclusion

Property transfer in Kenya is a legally structured process designed to protect both buyers and sellers. Understanding the required documents and procedures is essential for anyone engaging in land transactions. Whether you are purchasing your first property or investing in real estate, always ensure compliance with legal requirements and seek professional legal assistance.

 

This publication is provided for general information purposes only and does not constitute legal advice. Specific legal advice should be sought in relation to particular circumstances.

Understanding Freehold and Leasehold Land Ownership in Kenya

Land ownership in Kenya is a critical consideration for investors, homeowners, and developers. Recent debates around proposed amendments to the Land Act 2012—which were ultimately withdrawn—highlight the importance of understanding the different types of land tenure available. This knowledge is essential for anyone looking to acquire land or property in Kenya.

The withdrawn proposal sought to introduce a clause requiring freehold landowners—who enjoy perpetual ownership of land—to pay an annual land rent. Under the Constitution of Kenya, land tenure refers to the act, right, or period of holding land, which falls under two main categories: freehold and leasehold.

Freehold Ownership

Freehold tenure confers complete ownership of land for life. Owners have the liberty to use the land within the bounds of applicable laws and regulations, and the land can be passed down to descendants indefinitely, subject to succession laws.

Key Features of Freehold Land:

• Absolute ownership of the land
• No annual land rent required
• Inheritable by descendants in accordance with succession laws
• Fewer restrictions compared to leasehold tenure
• Foreign nationals are generally prohibited from owning freehold land

Freehold is commonly preferred by those seeking long-term security of ownership and control over land use.

Leasehold Ownership

Leasehold tenure grants the lessee the right to use land owned by another party (the lessor) for a fixed period, as defined in a lease agreement. Upon expiration, ownership reverts to the freeholder unless the lease is renewed. Leasehold property is common in urban areas, municipalities, and towns, and freehold land intended for commercial use may also be offered on lease.

Key Features of Leasehold Land:

• Ownership is limited to the lease period, which can range from a few decades to 99 or even 999 years
• Lessees may be required to pay annual rent to the lessor
• Use of the land is subject to conditions outlined in the lease agreement
• Lease renewals are possible but subject to negotiation and the lessor’s consent
• Foreigners are permitted to acquire leasehold interests

Key Differences Between Freehold and Leasehold

Feature	Freehold	Leasehold
Duration of Ownership	Perpetual, no time limit	Limited to lease term (decades to 999 years)
Land Rights	Full rights over land and buildings	Rights limited to lease terms
Transfer of Ownership	Can be freely transferred or inherited	Transfer subject to lessor approval and lease conditions
Payment	One-time purchase price	Initial payment plus ongoing rent/ground rent
Control	Full control over property	Subject to restrictions in lease agreement

 

Why Understanding Tenure Matters

Many investors acquire property without fully appreciating the implications of the tenure system, which can lead to legal, financial, and operational pitfalls. Conducting due diligence and seeking professional legal advice ensures that investors make informed decisions and avoid costly mistakes.

By understanding whether land is freehold or leasehold, investors can plan effectively for ownership, usage, transfer, and succession, and mitigate risks associated with property acquisition in Kenya.

This publication is intended for general informational purposes and does not constitute legal advice. Investors and property buyers should consult qualified legal practitioners before entering into land transactions.

Terrorism Financing and Financial Sanctions in Kenya: Key Compliance and Regulatory Considerations

 

LEGAL UPDATE | BANKING, FINANCE & REGULATORY

Terrorism Financing and Financial Sanctions in Kenya: Key Compliance and Regulatory Considerations

Executive Summary

Kenya continues to strengthen its legal and regulatory framework to combat terrorism financing and implement terrorism financial sanctions (TFS). Financial institutions, corporates, non-profit organizations, and professional advisers are increasingly expected to maintain robust anti-money laundering and counter-terrorism financing (AML/CFT) compliance systems.

Key considerations include:

• Terrorism financing is criminalised under the Prevention of Terrorism Act.
• Reporting institutions must implement AML/CFT controls under the Proceeds of Crime and Anti-Money Laundering Act.
• Kenya enforces targeted financial sanctions in line with obligations issued by the United Nations Security Council.
• Financial institutions and designated non-financial businesses and professions (DNFBPs) must conduct customer due diligence, sanctions screening, and suspicious transaction reporting.

Failure to comply with AML/CFT obligations may expose organizations to regulatory enforcement actions, financial penalties, and reputational risk.

1. Introduction

The disruption of financial networks that support terrorism has become a key priority for governments and regulators worldwide. Terrorism financing can occur through legitimate or illicit financial channels, including charitable donations, commercial activities, and informal financial systems.

Kenya has experienced the operational impact of terrorism, including attacks such as the Westgate Shopping Mall attack and the Garissa University College attack. These events reinforced the need for robust legal mechanisms designed to detect and disrupt financial flows associated with terrorist networks.

In response, Kenya has implemented a comprehensive legal framework aligned with international standards established by the Financial Action Task Force.

2. Legal and Regulatory Framework

Kenya’s counter-terrorism financing regime is primarily governed by legislation aimed at criminalising terrorism financing and imposing preventive compliance obligations on regulated entities.

Prevention of Terrorism Act

The Prevention of Terrorism Act criminalises the financing of terrorist activities and prohibits any person from directly or indirectly providing funds, financial services, or property for terrorist purposes.

The Act empowers authorities to:

• Freeze or seize assets connected to terrorism financing
• Investigate financial networks linked to terrorist organisations
• Prosecute individuals and entities involved in financing terrorism

Penalties under the Act may include substantial criminal sanctions, including imprisonment and confiscation of assets.

Proceeds of Crime and Anti-Money Laundering Act (POCAMLA)

The Proceeds of Crime and Anti-Money Laundering Act establishes Kenya’s broader AML/CFT compliance framework.

The Act imposes regulatory obligations on reporting institutions, including:

• Banks and financial institutions
• Insurance companies
• Money remittance providers
• Advocates and other professional advisers in specified transactions
• Real estate professionals and accountants

Key obligations include:

• Customer Due Diligence (CDD)
• Record-keeping requirements
• Monitoring and reporting suspicious transactions

3. Institutional Oversight and Enforcement

Kenya’s AML/CFT framework is implemented through several regulatory and supervisory bodies.

Financial Intelligence

The Financial Reporting Centre acts as Kenya’s financial intelligence unit and is responsible for receiving, analysing, and disseminating suspicious transaction reports from reporting institutions.

Financial Sector Supervision

The Central Bank of Kenya oversees the banking sector and ensures compliance with AML/CFT regulatory requirements by licensed financial institutions.

Counter-Terrorism Coordination

The National Counter Terrorism Centre coordinates national strategies aimed at preventing terrorism and disrupting terrorist financing networks.

4. Terrorism Financial Sanctions (TFS)

Targeted financial sanctions are a key mechanism used globally to disrupt financial support to terrorist organisations.

Kenya implements sanctions regimes adopted by the United Nations Security Council, which require member states to impose asset freezes against designated individuals and entities associated with terrorism.

Under these obligations, reporting institutions must:

• Immediately freeze assets belonging to designated persons
• Prevent funds or economic resources from being made available to them
• Report relevant actions to authorities

Sanctions compliance is therefore an essential component of institutional AML/CFT programs.

5. Compliance Considerations for Businesses and Financial Institutions

Organizations operating within Kenya should adopt a risk-based compliance framework designed to mitigate exposure to terrorism financing risks.

Key measures include:

Customer Due Diligence

Institutions must verify customer identities and identify beneficial owners before establishing business relationships.

Enhanced due diligence may be necessary in higher-risk scenarios, including transactions involving politically exposed persons or high-risk jurisdictions.

Sanctions Screening

Customers, counterparties, and beneficial owners should be screened against applicable sanctions lists to ensure compliance with financial sanctions regimes.

Suspicious Transaction Reporting

Where institutions detect unusual financial activities or suspect potential terrorism financing, they must report such transactions to the Financial Reporting Centre.

Internal Compliance Controls

Effective compliance frameworks typically include:

• Written AML/CFT policies
• Internal risk assessments
• Staff training programs
• Appointment of compliance officers

6. Implications for Law Firms and Professional Advisers

Law firms may fall within the scope of AML/CFT regulations when engaging in financial or transactional work on behalf of clients.

Examples include:

• Managing client funds
• Facilitating real estate transactions
• Establishing corporate structures
• Structuring financial arrangements

In these circumstances, advocates are expected to conduct client due diligence and risk assessments to prevent misuse of legal services for illicit financial activities.

7. Key Takeaways for Businesses

Organizations operating in Kenya should consider the following compliance priorities:

• Review AML/CFT policies to ensure alignment with current legislation.
• Implement sanctions screening procedures.
• Conduct regular risk assessments relating to terrorism financing exposure.
• Provide AML/CFT training to employees and compliance personnel.
• Maintain clear reporting procedures for suspicious transactions.

A proactive compliance approach can significantly reduce regulatory and reputational risk.

8. Conclusion

Kenya’s legal framework governing terrorism financing and financial sanctions continues to evolve in line with international AML/CFT standards. Regulators are increasingly focused on ensuring that reporting institutions maintain effective compliance systems capable of identifying and preventing illicit financial flows.

Financial institutions, corporates, and professional advisers should therefore continue to strengthen internal controls and remain alert to emerging regulatory developments in this area.

Key Contacts

For further information regarding terrorism financing compliance, financial sanctions, or AML/CFT regulatory obligations in Kenya, please contact our Banking, Finance and Regulatory Practice Group.

This publication is provided for general information purposes only and does not constitute legal advice. Specific legal advice should be sought in relation to particular circumstances.

Rectification of a Name on a Land Title in Kenya: Legal Process Under the Land Registration Act, 2012

Errors in names appearing on land titles are more common than many property owners realize. Whether caused by a typographical mistake, transposition of names, or a lawful change of name after marriage or through deed poll, such discrepancies should be formally corrected to avoid complications in future transactions.

Under the Land Registration Act (LRA), 2012, rectification of a name on a land title is provided for under Section 79, which empowers the Land Registrar to correct errors in the register.

Below is a practical guide to the process.

 

The Applicable Forms

Rectification of a name is initiated using the prescribed forms under the LRA:

• Form LRA 87 – Application to Rectify the Register
  This is the primary application form. It specifies the incorrect name appearing in the register and provides the correct name to be entered.
• Form LRA 89 – Consent to Rectify the Register
  This form is often required where the rectification affects proprietorship details, confirming that the registered owner consents to the correction.

In some cases, the Registrar may also issue:

• Form LRA 90 or LRA 91 – Notice of Intention to Rectify the Register, allowing for objections (if any) before the correction is effected.

 

Required Supporting Documents

The following documents are typically required to support the application:

• Original Title Deed or Certificate of Lease
• Copy of National ID or Passport
• Copy of KRA PIN Certificate
• Registered Deed Poll (where the name change was formal)
• Affidavit explaining the discrepancy (e.g., spelling error or name rearrangement)
• Birth Certificate or Marriage Certificate (where applicable)
• Two coloured passport-size photographs

Providing complete and consistent documentation is critical to avoid delays.

 

How the Process Works

1. Filing the Application

The application is lodged with the Land Registrar at the registry where the property is registered. Currently, most applications are processed online through the ArdhiSasa platform.

In practice, applications are typically prepared and filed by an advocate on behalf of the applicant to ensure compliance with statutory requirements.

2. Verification by the Registrar

The Land Registrar reviews the submitted documents to confirm the existence of an error and the legitimacy of the proposed correction.

3. Issuance of Notice (Where Necessary)

If required, the Registrar may issue a formal notice of intention to rectify the register to allow any interested parties to raise objections.

4. Payment of Fees

A statutory fee of approximately Kshs. 1,000 is generally payable for the rectification.

Upon approval, the register is corrected and an updated title document reflecting the correct name is issued.

 

Where to File

Applications should be submitted at the relevant Land Registry where the property is registered or online via the ArdhiSasa platform (for registries that are digitized).

 

Why Rectification Is Important

An incorrect name on a title document can:

• Delay property sales or transfers
• Complicate succession proceedings
• Create difficulties when charging property to a bank
• Raise unnecessary due diligence concerns

Prompt rectification ensures the integrity of ownership records and protects your proprietary interests.

 

Professional Guidance

While the process may appear straightforward, land registration matters require strict compliance with statutory and procedural requirements. Professional legal guidance helps prevent rejection, delays, or unintended legal consequences.

If you require assistance with rectification of a land title or any other land registration matter, our firm is available to provide comprehensive support from preparation to successful registration.

 

Disclaimer: This article is for general informational purposes only and does not constitute legal advice. For advice tailored to your specific circumstances, please consult a qualified advocate.

 

High Court Upholds Kshs. 500,000 Award in Data Privacy Dispute: The case of Moja Expressway Company v Ndung’u (Civil Appeal E673 of 2024) [2025]

In a significant decision on data protection and employee rights, the High Court has upheld a Kshs. 500,000 award against Moja Expressway Company for unlawfully using a former employee’s image in promotional material after the end of his employment.

The case, Moja Expressway Company v Ndung’u (Civil Appeal E673 of 2024) [2025], arose from a dispute between the company and its former employee, Ndung’u, over the use of his image on the company’s social media platforms.

Background of the Dispute

During his employment, Ndung’u had consented to the company’s use of his image for promotional purposes. However, after resigning in November 2022, the employment relationship came to an end.

Nearly a year later, in October 2023, the company published a promotional post featuring Ndung’u’s image. He subsequently lodged a complaint with the Office of the Data Protection Commissioner (ODPC), alleging unlawful use of his personal data.

The company maintained that there was no breach, arguing that Ndung’u had previously given oral consent and had never formally withdrawn it. The ODPC disagreed, finding that a data breach had occurred and awarding Ndung’u Kshs. 500,000 in compensation.

The Appeal

Moja Expressway Company challenged the ODPC’s decision before the High Court, arguing that the damages awarded were not justified and had not been proven.

The Court was asked to determine two key issues:

• Whether valid consent had been obtained for the continued use of the image; and
• Whether the ODPC’s award of compensation was warranted.

Court’s Findings

On the issue of consent, the Court held that consent to use personal data is not indefinite or automatic. It observed that the continued use of Ndung’u’s image after termination of employment amounted to commercial exploitation.

While such use during employment may be compensated through salary or commission, the Court found that once the employment relationship ended, any further commercial use required fresh consent or a separate contractual arrangement. The company’s failure to obtain renewed consent rendered the use unlawful.

Regarding compensation, the Court acknowledged that emotional distress and related harm are difficult to quantify. Relying on previous judicial decisions, including MWK & Another v Attorney General & 3 Others and Kamande v Nation Media Group, the Court affirmed that reasonable compensation may be awarded even where harm cannot be precisely measured.

The High Court ultimately found no fault in the ODPC’s decision and upheld the award of Kshs. 500,000 to Ndung’u.

Key Takeaway for the Public

The ruling reinforces a critical principle under Kenya’s data protection framework: consent is not static or permanent. Where the circumstances under which personal data was originally provided change — such as the termination of employment — fresh consent may be required.

The decision serves as a caution to employers and organisations that personal data, including images, cannot be commercially exploited beyond the scope of the original consent. Failure to comply with data protection obligations may result in legal and financial consequences.

 

Emerging Jurisprudence on Matrimonial Property and the Law of Succession in Kenya

By Ogeka, Advocate

Introduction

The intersection of matrimonial property rights and succession law has become one of the most contested areas in Kenyan jurisprudence. Since the enactment of the MatrimonialProperty Act 2013 – Empirical review of a decade of decided cases and the continued application of the Law of Succession Act (LSA), courts have grappled with reconciling equitable distribution during marriage with the devolution of property upon death. This has significant implications for spouses, families, and estate planning, particularly in a legal landscape shaped by constitutional equality and evolving societal norms.

1. Matrimonial Property under Kenyan Law

The Matrimonial Property Act, 2013 (MPA) defines matrimonial property as property acquired during the subsistence of a marriage and subject to joint ownership based on contribution — monetary and non-monetary. Kenyan courts have reiterated that:

• A property acquired during marriage, even if registered in one spouse’s name, is prima facie held in trust for both spouses.
• Contribution — including domestic work, childcare and management of family assets — is a key determinant of entitlement upon division.

Court decisions emphasise that mere registration in the name of one spouse does not negate the other’s interest if there is demonstrable contribution. Jurisprudence is evolving on the scope of contribution and the evidentiary threshold required, mirroring global trends towards recognising non-financial contributions in family law.

2. The Succession Law Interface

The Law of Succession Act governs devolution of property upon death. Historically, succession law and matrimonial property law operated in silos: the former regulating inheritance and estate administration, the latter focusing on property rights between spouses during life or at divorce. However, emerging case law now confronts their convergence. 

In FEO v ACO (Estate of the Late BPO) [2024] KEHC 14889 (KLR), the High Court held that the concept of matrimonial property, strictly speaking, does not organically belong in succession causes. The court reasoned that matrimonial property rights arise during a marriage and, upon death, transform into rights enforceable only through succession — not as an independent cause of action. Critically, it underscored that a claim to matrimonial property ought ideally to be determined before death to avoid prejudice to other heirs.

Similarly, in In re CKN & ENM (Deceased) [2026] KEHC 332 (KLR), the High Court clarified that once a spouse dies before a matrimonial claim is substantiated, any rights they may have had under the MPA fall to the deceased’s estate — and must be pursued through succession proceedings. 

3. Procedural and Jurisdictional Challenges

Recent decisions highlight procedural complexities:

• In LWM v Kioko & 2 others [2024] KEHC 8270 (KLR), a matrimonial property claim filed post-death without timely substitution of parties was dismissed for abatement, illustrating the importance of procedure in preserving substantive rights.
• Cases such as KW v Estate of KW [2023] KEHC 23180 (KLR) emphasise that courts may redirect spouses to probate causes rather than entertain matrimonial actions once a spouse has died, reaffirming that the probate court has exclusive jurisdiction over estate matters.

These decisions underscore that practitioners must strategically plan litigation — ensuring matrimonial property issues are addressed while both spouses are alive or immediately upon death within proper succession proceedings.

4. Constitutional Dimensions and Emerging Issues

A notable emerging trend pertains to gender equality in succession rights. In Dennis Kivuti Mungai vs Attorney General (2025), the High Court declared Section 29(c) of the Law of Succession Act unconstitutional for imposing unequal dependency requirements on widowers compared to widows. The court held that this discriminatory burden violated constitutional equality provisions. This decision signals an increasing judicial willingness to align succession statutes with constitutional norms of gender equality.

5. Theoretical and Policy Considerations

The apparent tension between matrimonial property rights and succession rights calls for doctrinal and legislative harmonisation. Academic commentary highlights inconsistencies between the Matrimonial Property Act and the Law of Succession Act, particularly in polygamous families where spousal contributions are not adequately reflected in intestate distribution provisions. Without reform, the current framework may fail to protect the contributions of spouses — especially women — in both marital and post-death contexts.

Conclusion

Jurisprudence on matrimonial property and succession in Kenya is at a critical inflection point. Courts are increasingly clarifying that:

• Matrimonial property rights do not automatically transfer into succession causes but must be validated during life or efficiently transitioned into estate claims.
• Procedural compliance is crucial to preserving rights after death.
• Constitutional principles, particularly gender equality, now inform succession jurisprudence.

For legal practitioners and clients alike, the evolving case law underscores the necessity of early action, careful litigation planning, and estate planning that anticipates these intersecting issues. As Kenyan courts further refine these doctrines, stakeholders must remain attentive to both statutory developments and judicial interpretations to ensure equitable outcomes.

This publication is intended for informational purposes for members of the legal sector and public and does not constitute legal advice.

CAN MICROFINANCE INSTITUTIONS CHARGE AND AUCTION PROPERTY IN KENYA? - An in-depth legal analysis under Kenyan law

Intro

Microfinance institutions in Kenya may take security over property — including land and, where applicable, movable assets — to secure loans. However, the legitimacy of those security interests and enforcement actions turns on compliance with specific statutory frameworks and judicial pronouncements.

This article examines:

1. When and how MFIs can take property as security;
2. Legal requirements for enforcing security against default;
3. Borrower protections under statute and case law;
4. Jurisdictional and regulatory constraints; and
5. Practical compliance guidance.

1. Legal Foundations for Charging Property in Kenya

1.1 Charges Defined and Recognised

Under the Land Act (the Land Act), a “charge” over land is defined as an interest in land securing the repayment of money or performance of an obligation. It includes both formal and informal charges.

• Formal charge: Requires execution of a written instrument and registration as an encumbrance at the Lands Registry.
• Informal charge: A written and witnessed undertaking accepted by the chargor with clear intention to create security; enforceable only with the leave of court unless otherwise specified by law.

For movable assets (e.g., machinery, livestock), the Movable Property Security Rights Act governs creation and registration of security rights, enhancing clarity and enforcement for non-land collateral.

2. Can Microfinance Institutions Legally Take Property as Security?

2.1 General Authority to Take Security

There is no express prohibition in Kenyan law preventing MFIs from taking security over land or movable property provided:

• The chargor voluntarily offers the property as collateral;
• The instrument complies with statutory form and registration requirements; and
• The creditor adheres to regulatory obligations, where applicable.

In Rafiki Microfinance Bank Ltd v John & Another the High Court highlighted the statutory requirements for completing a charge — including registration and compliance with Land Act formalities — as conditions precedent to enforceability.

2.2 Licensing and Mortgage Business

While MFIs can take security, lenders not licensed to conduct mortgage finance business may face regulatory challenges. Recent commentary suggests a tension between the regulatory requirements under the Banking Act — which restricts unlicensed entities from conducting mortgage finance business — and usual practice in the microfinance sector. 

This has resulted in litigation challenging the legality of certain charges, though courts have not uniformly disallowed all unlicensed charging practices so long as statutory requirements are met. The licensing question remains an emerging area of regulatory jurisprudence.

3. Enforcement: When and How Property Can Be Sold

The power to sell charged property is not automatic upon default. It must follow strict statutory procedures in the Land Act.

3.1 Statutory Notices – Sections 90 and 96 of the Land Act

Under Section 90 of the Land Act, a chargee must serve a written notice to the chargor upon default, informing them:

• of the nature and extent of the default;
• the amount payable (if a monetary default) and a minimum 3-month period to remedy same;
• consequences of continued default; and
• the right to seek court relief.

Only after expiry of the Section 90 notice may the chargee seek remedies, including sale.

Section 96 of the Land Act requires a separate notice to sell after the default period has elapsed, and the sale may not proceed until at least 40 days after service of this notice.

These timelines are mandatory preconditions to valid enforcement: failure to serve them in proper form renders any attempted sale unlawful. As the High Court explained in East Africa Ventor Co. Ltd v Agricultural Finance Co-op Ltd & another, statutory notices are essential and cannot be bypassed.

3.2 Duty of Care and Valuation — Section 97

Once the power of sale is triggered, Section 97 of the Land Act imposes a duty of care on the chargee to obtain the best price reasonably obtainable and to procure a forced sale valuation before sale.

In Omingo v Rafiki Microfinance Bank Limited & Another, the High Court applied Section 97 and held that undervaluation or irregular sale may breach the duty of care, potentially rendering the sale susceptible to challenge.

4. Jurisdiction and Procedural Considerations

4.1 Appropriate Forum

Disputes over validity of charges and enforcement proceedings lie within the High Court rather than the Environment and Land Court Act, as enforcement is a financial and contractual matter, not a land use question. In Cabro Mombasa Limited v Rafiki Microfinance Bank Limited, the court struck out an injunction application, clarifying that such disputes do not fall under Environment and Land Court jurisdiction.

5. Borrower Protections Under Kenyan Law

5.1 Spousal and Third-Party Consent

A charge over matrimonial property generally requires written spousal consent, failing which the charge may be voidable. The Land Registration Act and the Matrimonial Property Act give effect to this requirement.

5.2 Equity of Redemption

Even after default, a borrower retains the equity of redemption — the right to redeem property by paying outstanding debt before sale is concluded. The courts enforce this principle as part of constitutional property rights under Article 40 of the Constitution of Kenya.

5.3 Injunctive Relief for Procedural Irregularities

Borrowers can seek interim or permanent injunctions where enforcement processes — such as statutory notice— are defective. In Edward Kangethe Kabinga & 2 others v Kenya Women Microfinance Bank PLC, the High Court granted injunction pending proper notice service.

6. Risks and Compliance Hazards

6.1 Failure to Serve Mandatory Notices

Courts have repeatedly held that non-compliance with Sections 90 and 96 invalidates enforcement steps. Mere advertisement without proper notice will not cure the defect.

6.2 Duty of Care Violations

Selling property far below market value may constitute a breach of the duty of care under Section 97, exposing the chargee to orders setting aside the sale.

6.3 Informal Charges Without Court Approval

Where a charge is informal, statutory enforcement must be preceded by court leave under Section 79(7) of the Land Act.

7. Practical Takeaways

For Borrowers

• Insist on proof of proper statutory notice (Sections 90 & 96).
• Confirm title and spousal or third-party consents.
• Seek timely legal intervention if statutory preconditions are absent.

For MFIs

• Register all formal charges correctly at the Lands Registry and, where applicable, at the Registrar of Security Rights for movables.
• Serve statutory notices in full compliance with legislative timelines.
• Conduct updated forced sale valuations within prescribed periods.
• Document compliance rigorously to withstand judicial scrutiny.

Conclusion

Yes — microfinance institutions in Kenya may charge property and enforce it through auction sale, but only if they:

1. Comply with the Land Act’s statutory notice regime;
2. Respect valuation and duty of care requirements;
3. Adhere to jurisdictional and procedural safeguards; and
4. Ensure charges are validly created and registered.

Non-compliance attracts judicial sanctions, including injunctions and setting aside of sales, reinforcing that enforcement is rooted in due process and statutory fidelity.

This publication is intended for informational purposes for members of the legal and financial sector and does not constitute legal advice.