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What are the most common mistakes to avoid when drafting a Real Estate Assignment Agreement?
Introduction
Drafting a Real Estate Assignment Agreement in Kenya requires meticulous attention to detail to ensure that the agreement is legally binding and protects the interests of all parties involved. This document is governed by various laws and regulations, including the Land Act, 2012, the Land Registration Act, 2012, and the Law of Contract Act, Cap 23. In this response, I will outline the most common mistakes to avoid when drafting a Real Estate Assignment Agreement, citing relevant sections from these Acts.
Table of Contents
Failure to Identify Parties Correctly
Inadequate Property Description
Lack of Consideration Clause
Failure to Obtain Necessary Consents
Ignoring Due Diligence
Inadequate Assignment Clause
Failure to Address Liabilities and Obligations
Lack of Governing Law Clause
Failure to Register the Assignment
Conclusion
1. Failure to Identify Parties Correctly
Sources:
Law of Contract Act, Cap 23, Section 3
One of the most common mistakes is failing to correctly identify the parties involved in the agreement. The names, addresses, and identification details of both the assignor (the current holder of the property rights) and the assignee (the new holder of the property rights) must be clearly stated. Incorrect or incomplete identification can lead to disputes and render the agreement void.
2. Inadequate Property Description
Sources:
Land Registration Act, 2012, Section 14
The property being assigned must be described in detail. This includes the land reference number, size, location, and any other relevant details. An inadequate description can lead to ambiguity and potential legal disputes. Ensure that the property description matches the details in the title deed and other official documents.
3. Lack of Consideration Clause
Sources:
Law of Contract Act, Cap 23, Section 2
Consideration is a fundamental element of any contract. The agreement must clearly state the consideration (usually monetary) that the assignee will provide in exchange for the property rights. Failure to include a consideration clause can render the agreement unenforceable.
4. Failure to Obtain Necessary Consents
Sources:
Land Act, 2012, Section 48
Certain assignments may require consents from third parties, such as mortgagees, landlords, or government authorities. Failing to obtain these consents can invalidate the agreement. Ensure that all necessary consents are obtained and documented before finalizing the agreement.
5. Ignoring Due Diligence
Sources:
Land Registration Act, 2012, Section 26
Due diligence involves verifying the legal status of the property, including checking for any encumbrances, liens, or disputes. Ignoring due diligence can result in the assignee acquiring a property with hidden legal issues. Conduct thorough searches and obtain a certificate of title to confirm the property's status.
6. Inadequate Assignment Clause
Sources:
Law of Contract Act, Cap 23, Section 10
The assignment clause should clearly state the rights and obligations being transferred from the assignor to the assignee. An inadequate assignment clause can lead to misunderstandings and disputes. Ensure that the clause is comprehensive and unambiguous.
7. Failure to Address Liabilities and Obligations
Sources:
Land Act, 2012, Section 55
The agreement should clearly outline the liabilities and obligations of both parties. This includes any outstanding payments, maintenance responsibilities, and compliance with local laws and regulations. Failure to address these issues can lead to disputes and legal complications.
8. Lack of Governing Law Clause
Sources:
Law of Contract Act, Cap 23, Section 23
A governing law clause specifies the legal framework that will govern the agreement. In Kenya, this should be Kenyan law. Failure to include a governing law clause can lead to jurisdictional issues and complicate the resolution of disputes.
9. Failure to Register the Assignment
Sources:
Land Registration Act, 2012, Section 44
In Kenya, certain assignments must be registered with the relevant land registry to be legally effective. Failure to register the assignment can render it void against third parties. Ensure that the assignment is registered promptly and that all necessary fees are paid.
Conclusion
Drafting a Real Estate Assignment Agreement in Kenya involves careful consideration of various legal requirements and potential pitfalls. By avoiding the common mistakes outlined above, you can ensure that the agreement is legally binding and protects the interests of all parties involved. Always consult with a qualified legal professional to review the agreement and provide guidance tailored to your specific situation.
Answered by mwakili.com