Welcome to today’s episode of the RealEstateGuru254 Podcast, where we demystify the world of real estate in Kenya. In today's episode, we'll be discussing property encumbrances and how they can affect the transfer of ownership.

And, what needs to happen before the ownership of property that has been placed under an encumbrance can be transferred?

So, what exactly is a property encumbrance? Why is it critical that any property investor make it a priority in Understanding Property Encumbrances and how they affect the property transfers and registration?

Simply put, an encumbrance is a claim or a burden on a piece of real estate that affects the owner's ability to use or sell the property. There are many different types of encumbrances, including cautions, caveats, charges, liens, easements and more.

Did you know that a registered lease whose term is unexpired serves the same purpose as any other type of encumbrance? Well, neither did we!

Did you know that the Government can place a restriction on a property that may be the subject of disputed ownership, property that may be the subject of compulsory acquisition, or that may be the subject of fraud or that may have been acquired using illegal proceeds?

Go figure!

So, what does all of this mean for someone who is looking to transfer ownership of a property, for example, you who may be looking to purchase a property that is under an encumbrance?

Understanding Property Encumbrances and how they affect the property transfers and registration is a key to the due diligence process. Thoroughly check for any encumbrances before attempting to transact on any property.

If you're buying a property with a registered charge on it, for example, you'll want to make sure that the charge has been discharged before you make any payments because the transfer cannot happen before the charge has been discharged.

And if you're selling a property, it's important to make sure that any easements or other encumbrances are disclosed to the buyer so that there are no surprises down the line. What surprises may occur down the line you ask? Well, I have seen a seller attempt to sell a vacant plot that was adjacent to a power line which would have rendered nearly 40% of the property unusable for any permanent structures. To an unsuspecting buyer, this would have been a “deal-breaker” say if they intended to use the land for home construction or development of a commercial property.

In conclusion, property encumbrances can have a significant impact on the transfer of ownership. It's crucial to be aware of any encumbrances that may be affecting a property and to handle them properly before completing a transfer. Thanks for tuning in to the "Real Estate 101" podcast. Join us for our next episode, where we'll be discussing the different types of property ownership and how to choose the right one for you.

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