Borrowers to foot conversion fees for titles held by lenders

 

Borrowers who secured loans using land titles will bear the cost to enable  lenders facilitate the conversion to meet new requirements. 

This follows  the Ministry of Land's announcement of a new lands registration system which will see title deeds issued before the enactment of the Land Registration Act in 2012 canceled and new ones issued.

According to the Kenya Bankers Association (KBA), financiers will serve the role of facilitating the conversion to the new title deeds on behalf of their borrowers, who may incur some costs.

''Borrowers are encouraged to speak to their lenders for clarification,'' director of communications at KBA Nuru Mugambi said. 

She said that the association welcomes the government's decision to reinforce the integrity of title deeds, adding that it will give financiers confidence in the system and thus increase efficiency in use of titles as collaterals.

Financial institutions are among victims of land title deeds fraud racket, losing billions of shillings. 

For instance, Equity Bank and NCBA in 2019 lost Sh500 million after the Court of Appeal ruled that the Co-operative Bank of Kenya had the right to a property used to acquire loans from the three banks.

The lenders were laying claim on the single property in Riruta, which is registered in different names and was used to secure over Sh450 million in loans.

Under the new arrangement, the Land ministry will utilise the Registry Index Maps (RIMs) as a reference, replacing the deed plans, further minimising land fraud.

RIMs display all land parcels within an area as opposed to a deed plan that captures data on one specific parcel.

The government has been issuing titles manually  under the Registered Land Act (RLA),  Registration of Titles Act (RTA),  Land Titles Act (LTA), and  Government Lands Act (GLA)

 Dealings relating to parcels within the registration unit shall from April 1 be carried out in the new registers.

A pilot run of the migration is already underway in Nairobi with some 5,493 parcels already marked for conversion by the Registrar of Lands.

Announcing the change last week, Land CS Farida Karoney said the process will entail the preparation of cadastral maps together with a conversion list indicating new and old numbers for parcels of land within a registration unit.

he added that the cadastral maps together with a conversion list will be published in the Kenya Gazette, with the notice specifying when the register shall be open to the public for transactions or dealings within the registration unit.

''Any person with an interest in land in the registration unit shall lodge a complaint to the registrar who shall resolve the same within 90 days of receipt,'' Karoney said.

At the commencement date, all registers shall be closed and all transactions carried out in the new register. However, all the closed registers and supporting documents shall be maintained in the new registration unit.

Land title deeds are among the popular assets used by borrowers to secure credit from banks in the country. 

Every day, hundreds of title deeds are submitted to financial institutions as securities for loans. There is, however, no official data on the number of title deeds held. 

Even so, lenders are now embracing movable property such as household goods, livestock and office equipment as collaterals, thanks to the Movable Property Security Rights Act 2017 that has enabled banks to diversify collateral from the tradition of using immovable assets — primarily land and buildings.

In 2019, KBA revealed that movable property such as household goods, livestock and office equipment added 183,487 loan accounts into the banking sector.