Kenya: Housing Finance calls for a revision of new land laws

Jul 24, 2012

Kenyan mortgage lender Housing Finance urged the authorities to review the newly introduced Land Act, stating that it exposes financial institutions to the risk of litigation where provisions for a charge do not conform with some clauses of the new land laws.

Kenyan mortgage lender Housing Finance urged the authorities to review the newly introduced Land Act, stating that it exposes financial institutions to the risk of litigation where provisions for a charge do not conform with some clauses of the new land laws.

It said on July 19th that the new laws are being enforced retrospectively and may require financiers to revisit agreements for loans disbursed prior to their enactment.

"Financial institutions have to grapple with the possibility of litigation as the terms in their documentation may not be in conformity with the Act such as spousal or beneficiary consent," said Housing Finance's legal manager June Rienye, quoted by The Star.

She explained that spousal consent was not mandatory before the introduction of the new laws, and that this now means lenders have to go back to mortgage holders to ensure they have consent of interested parties.

Managing director Frank Ireri told The Star such clauses will make the charge, which is a security against a loan taken to acquire a land or house, an unattractive form of security.

The Land Act was introduced in May 2012 to facilitate the social, economic and political development of the country, according to ONG UN-Habitat.

It is expected to promote better management and usage of land in Kenya.
The law makes it impossible to get a mortgage loan using property acquired during the course of marriage as security without the consent of the husband and the wife.

The landlord wishing to sell property must also inform tenants in writing with a three months notice.

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