Red flags alert! What to watch out for when buying land

Land for sale sign. (Courtesy)

There are three companies that have approached me with offers on some properties that they have on sale. Their prices are attractive and pocket friendly, which would guarantee good returns. Should I decide to buy and later sell at a profit? There have been media reports on many who have lost fortunes after attempts to buy plots from companies hit a dead end. What red flags should I look out for before buying?

Aleeza, Nairobi

A section of investors have successfully bought property (plots) from registered land selling companies. On the flipside, there are also many who have lost their savings after attempts to buy land from such companies turned sour.

Before purchasing the plot from the land selling company, it is important to exercise due diligence, which means engaging a lawyer with a valid practicing certificate for the current year.

Apart from conducting personal and official searches at the Ministry of Lands to confirm the registered owners of the property, the lawyer will investigate the company by probing its records at the registrar of companies.

It is important to know who the officials of the company are and whether they have legal authority to sign documents to transact on the property. It is also important to know whether the company is in good books of the law.

Recently, there have been reported cases of innocent first-time buyers who relied on advertisements on radio stations to buy plots from land selling companies, which turn out to either be non-existent or lacking the readily available amenities hyped to exist.  

Many have paid money for plots they have not seen believing that they are serviced. The same land buying companies have even been reported to sell one plot to multiple unsuspecting individuals who ignored performing due diligence before opening their wallets and purses.

However, there are also legit land selling companies that are professional in their transactions – lucky prospective investors have successfully purchased property from them. It is important to ensure that you are dealing with such companies.

It is also important to know that there are other hidden costs when purchasing property so as not to spend everything on paying the seller unaware of other costs.

For instance, apart from paying the legal fees, there may be need to engage a registered valuer to know the exact cost of the property to avoid well over the market price or even engaging the services of a registered surveyor to allocate the exact location of the plot as per the map.

There are other costs associated with land transfers and payment of taxes like stamp duty, which cannot be overlooked.

-        Harold Ayodo is an Advocate of the High Court of Kenya