REAL ESTATE DEVELOPERS’ OBLIGATIONS  

Real Estate Kenya series 2

In our previous Real estate Kenya series 1 insight, we outlined factors real estate investors must consider before investing in real estate in Kenya. In this article we outline the duties, responsibilities and obligations real estate developers have and owe to purchasers when executing real estate construction projects.

Below are the obligations of developers in real estate project:

1. Every developer has the duty to ensure that the title deed for every land on which project is conducted is clear, clean and legal.
2. Every developer must confirm and ensure that all legal dues on the land have been paid to the relevant registries or authorities.
3. If the project is being financed by any financial institution, the developer must secure the required finances from the funding institutions and must disclose this fact to every investor/purchaser of units in the development.
4. Before commencing the development, the developer must get all legal, regulatory and statutory clearances from relevant authorities. Such clearances include, approval from local county government, approval from National Construction Authority, engage qualified engineers, get plan approvals, NEMA approval etc.
5. Every developer must be able to repay the investors’ money with interest if there is any delay or the project is stopped.
6. Every developer must plan in advance to minimize or mitigate any risk that may result in delay of the project such risk as shortage of raw material etc.
7. Once the project is complete every developer is expected to offer properties/units at a fair market price so as not to violate consumer protection laws.
8. Every developer should enquire with various departments of the municipality in order to establish whether any notices or requisitions relating to the property are outstanding.
9. Every developer has a duty to do everything to avoid or minimize delay in project completion.
10. Every developer has a duty to offer quality construction and services.
11. Every developer has a duty to keep the Investor/unit purchasers informed on the progress of the construction project and update them regularly.
12. Every developer has a duty to safeguard the interest of Investor/unit purchasers/customers.
13. Every developer has a duty to sell properties free from encumbrances and if the entire project is financed and charged, the investors must be notified of the same including an escrow account in which purchase price is to be paid and units discharged.
14. Every developer must give the buyers a clear idea on extra charges like electricity, sewerage, covered car park, open car park, service charge and legal fee etc. associated with the transaction.
15. Every developer must stick to the initial master plan that it advertised when marketing the project unless it is extremely necessary to change in which case investors must be notified.
16. Every developer is required to act in utmost transparency while dealing with their customers.
17. If there is need to engage real estate agents, the developer must engage trusted agents with clean track record and be ready to be accountable for each agent.
18. Every developer owes the investors the duty to complete the project.
19. Every developer has the duty to obtain the completion certificate and certificate of practical occupation.
20. Every developer has the duty to oversee registration of purchased unit in the name of the purchaser and handover all the title documents to each purchaser.
21. Every developer has the duty to ensure compliance with laws and regulations regulating real estate industry and ensure there is established the management corporation of the estate developed.

Finally, every developer has a duty to engage qualified professionals such as architects, surveyors and lawyer to assist in executing the project.

At A.O.WANGA ADVOCATES we are happy to assist you in matters legal compliance as you embark on investing real estate in Kenya.

For more information reach out to us via info@aowangaadvocates.com or +254794600191

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