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What are the standard clauses for a Real Estate Investment Agreement?
Standard Clauses for a Real Estate Investment Agreement in Kenya
A Real Estate Investment Agreement (REIA) is a legally binding contract that outlines the terms and conditions of an investment in real estate. It is a crucial document that protects the interests of all parties involved in the transaction. In Kenya, the REIA is governed by various laws, including the Law of Contract Act, the Land Act, and the Land Registration Act.
Table of Contents
Introduction
Definitions
Parties
Subject Matter
Purchase Price and Payment Terms
Due Diligence
Representations and Warranties
Closing Conditions
Default and Remedies
Dispute Resolution
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
Governing Law and Jurisdiction
Entire Agreement
Notices
Severability
Assignment
Waiver
Confidentiality
Force Majeure
Amendments
Termination
1. Introduction
This Real Estate Investment Agreement (the "Agreement") is made and entered into as of [Date] by and between [Investor Name], a [State of Incorporation] corporation with its principal place of business at [Investor Address] (the "Investor"), and [Developer Name], a [State of Incorporation] corporation with its principal place of business at [Developer Address] (the "Developer").
2. Definitions
For purposes of this Agreement, the following terms shall have the meanings set forth below:
"Closing" means the date on which all conditions precedent to the closing of the transaction contemplated by this Agreement have been satisfied or waived.
"Development Property" means the real property located at [Property Address] (the "Property").
"Investment" means the investment by the Investor in the Development Property in accordance with the terms of this Agreement.
"Purchase Price" means the total amount of money to be paid by the Investor to the Developer for the Development Property, as set forth in Section 5.
3. Parties
The parties to this Agreement are:
Investor: [Investor Name]
Developer: [Developer Name]
4. Subject Matter
The subject matter of this Agreement is the investment by the Investor in the Development Property.
5. Purchase Price and Payment Terms
The Purchase Price for the Development Property shall be [Amount] (the "Purchase Price"). The Purchase Price shall be paid by the Investor to the Developer in accordance with the following schedule:
[Payment Schedule]
6. Due Diligence
Prior to the Closing, the Investor shall have the right to conduct a due diligence review of the Development Property and all related documents. The Investor shall have the right to access the Development Property and all related documents during normal business hours. The Investor shall be responsible for all costs associated with the due diligence review.
7. Representations and Warranties
Each party represents and warrants to the other party as follows:
Investor Representations and Warranties:
The Investor is a duly organized and validly existing corporation in good standing under the laws of its state of incorporation.
The Investor has the full right, power, and authority to enter into this Agreement and to perform its obligations hereunder.
The Investor has obtained all necessary consents and approvals from its board of directors and any other applicable regulatory bodies to enter into this Agreement.
Developer Representations and Warranties:
The Developer is a duly organized and validly existing corporation in good standing under the laws of its state of incorporation.
The Developer has the full right, power, and authority to enter into this Agreement and to perform its obligations hereunder.
The Developer has obtained all necessary consents and approvals from its board of directors and any other applicable regulatory bodies to enter into this Agreement.
The Developer has good and marketable title to the Development Property, free and clear of all liens, encumbrances, and other defects.
The Development Property is not subject to any environmental liabilities or other material defects.
8. Closing Conditions
The Closing of the transaction contemplated by this Agreement shall be subject to the satisfaction or waiver of the following conditions precedent:
Investor Conditions Precedent:
The Investor shall have completed its due diligence review of the Development Property and all related documents to its satisfaction.
The Investor shall have obtained all necessary consents and approvals from its board of directors and any other applicable regulatory bodies to close the transaction.
Developer Conditions Precedent:
The Developer shall have obtained all necessary consents and approvals from its board of directors and any other applicable regulatory bodies to close the transaction.
The Developer shall have delivered to the Investor all necessary documents and instruments to evidence the Developer's good and marketable title to the Development Property.
9. Default and Remedies
A party shall be deemed to be in default of this Agreement if it fails to perform any of its obligations hereunder within [Number] days after written notice from the other party. Upon the occurrence of a default, the non-defaulting party shall have the right to pursue any and all remedies available to it at law or equity, including, without limitation, the right to:
Terminate this Agreement.
Seek specific performance of this Agreement.
Seek monetary damages.
10. Dispute Resolution
Any dispute arising out of or relating to this Agreement shall be settled by binding arbitration in accordance with the rules of the [Arbitration Organization]. The arbitration shall be held in [City, State]. The decision of the arbitrator shall be final and binding on the parties.
11. Governing Law and Jurisdiction
This Agreement shall be governed by and construed in accordance with the laws of the Republic of Kenya. Any legal action or proceeding arising out of or relating to this Agreement shall be brought exclusively in the courts of the Republic of Kenya.
12. Entire Agreement
This Agreement constitutes the entire agreement and understanding between the parties with respect to the subject matter hereof and supersedes all prior or contemporaneous communications, representations, or agreements, whether oral or written.
13. Notices
All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered personally, sent by certified or registered mail, return receipt requested, or sent by overnight courier service, addressed as follows:
If to the Investor: [Investor Name] [Investor Address]
If to the Developer: [Developer Name] [Developer Address]
14. Severability
If any provision of this Agreement is held to be invalid or unenforceable, such provision shall be struck from this Agreement and the remaining provisions shall remain in full force and effect.
15. Assignment
This Agreement may not be assigned by either party without the prior written consent of the other party.
16. Waiver
No waiver of any breach of this Agreement shall be deemed a waiver of any subsequent breach.
17. Confidentiality
Each party agrees to hold confidential all information received from the other party pursuant to this Agreement, except to the extent such information is already in the public domain or is required to be disclosed by law.
18. Force Majeure
Neither party shall be liable for any delay or failure to perform its obligations hereunder due to any cause beyond its reasonable control, including, without limitation, acts of God, war, terrorism, labor disputes, or governmental regulations.
19. Amendments
This Agreement may be amended only by a written instrument signed by both parties.
20. Termination
This Agreement may be terminated by either party upon [Number] days' written notice to the other party.
Case Laws
Mombasa Cement Ltd v. Attorney General [2004] 1 EA 105: This case established the principle that the Kenyan courts have the power to review the validity of contracts entered into by the government. The case involved a challenge to a contract between the government and a private company for the construction of a cement factory. The court held that the contract was invalid because it was not entered into in accordance with the relevant procurement laws.
Kenya Commercial Bank Ltd v. Trust Bank Ltd [2003] 1 EA 1: This case dealt with the issue of breach of contract and the remedies available to the non-breaching party. The court held that the non-breaching party is entitled to damages for any loss suffered as a result of the breach. The court also held that the non-breaching party may be entitled to specific performance of the contract, depending on the circumstances.
Kenya Power & Lighting Co. Ltd v. Kenya Electricity Generating Co. Ltd [2002] 1 EA 1: This case involved a dispute over the interpretation of a contract for the supply of electricity. The court held that the contract should be interpreted in accordance with the intention of the parties, as evidenced by the language of the contract and the surrounding circumstances.
TLDR
The standard clauses for a Real Estate Investment Agreement in Kenya include provisions for definitions, parties, subject matter, purchase price and payment terms, due diligence, representations and warranties, closing conditions, default and remedies, dispute resolution, governing law and jurisdiction, entire agreement, notices, severability, assignment, waiver, confidentiality, force majeure, amendments, and termination.
Conclusion
The REIA is a complex legal document that requires careful consideration and drafting. It is essential to consult with an experienced Kenyan lawyer to ensure that the REIA is properly drafted and protects the interests of all parties involved.
Sources:
Sample Real Estate Investment Agreement
This Real Estate Investment Agreement (the "Agreement") is made and entered into as of [Date] by and between [Investor Name], a [State of Incorporation] corporation with its principal place of business at [Investor Address] (the "Investor"), and [Developer Name], a [State of Incorporation] corporation with its principal place of business at [Developer Address] (the "Developer").
WITNESSETH:
WHEREAS, the Investor desires to invest in the Development Property; and
WHEREAS, the Developer desires to sell the Development Property to the Investor;
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties agree as follows:
1. Definitions
For purposes of this Agreement, the following terms shall have the meanings set forth below:
"Closing" means the date on which all conditions precedent to the closing of the transaction contemplated by this Agreement have been satisfied or waived.
"Development Property" means the real property located at [Property Address] (the "Property").
"Investment" means the investment by the Investor in the Development Property in accordance with the terms of this Agreement.
"Purchase Price" means the total amount of money to be paid by the Investor to the Developer for the Development Property, as set forth in Section 5.
2. Parties
The parties to this Agreement are:
Investor: [Investor Name]
Developer: [Developer Name]
3. Subject Matter
The subject matter of this Agreement is the investment by the Investor in the Development Property.
4. Purchase Price and Payment Terms
The Purchase Price for the Development Property shall be [Amount] (the "Purchase Price"). The Purchase Price shall be paid by the Investor to the Developer in accordance with the following schedule:
[Payment Schedule]
5. Due Diligence
Prior to the Closing, the Investor shall have the right to conduct a due diligence review of the Development Property and all related documents. The Investor shall have the right to access the Development Property and all related documents during normal business hours. The Investor shall be responsible for all costs associated with the due diligence review.
6. Representations and Warranties
Each party represents and warrants to the other party as follows:
Investor Representations and Warranties:
The Investor is a duly organized and validly existing corporation in good standing under the laws of its state of incorporation.
The Investor has the full right, power, and authority to enter into this Agreement and to perform its obligations hereunder.
The Investor has obtained all necessary consents and approvals from its board of directors and any other applicable regulatory bodies to enter into this Agreement.
Developer Representations and Warranties:
The Developer is a duly organized and validly existing corporation in good standing under the laws of its state of incorporation.
The Developer has the full right, power, and authority to enter into this Agreement and to perform its obligations hereunder.
The Developer has obtained all necessary consents and approvals from its board of directors and any other applicable regulatory bodies to enter into this Agreement.
The Developer has good and marketable title to the Development Property, free and clear of all liens, encumbrances, and other defects.
The Development Property is not subject to any environmental liabilities or other material defects.
7. Closing Conditions
The Closing of the transaction contemplated by this Agreement shall be subject to the satisfaction or waiver of the following conditions precedent:
Investor Conditions Precedent:
The Investor shall have completed its due diligence review of the Development Property and all related documents to its satisfaction.
The Investor shall have obtained all necessary consents and approvals from its board of directors and any other applicable regulatory bodies to close the transaction.
Developer Conditions Precedent:
The Developer shall have obtained all necessary consents and approvals from its board of directors and any other applicable regulatory bodies to close the transaction.
The Developer shall have delivered to the Investor all necessary documents and instruments to evidence the Developer's good and marketable title to the Development Property.
8. Default and Remedies
A party shall be deemed to be in default of this Agreement if it fails to perform any of its obligations hereunder within [Number] days after written notice from the other party. Upon the occurrence of a default, the non-defaulting party shall have the right to pursue any and all remedies available to it at law or equity, including, without limitation, the right to:
Terminate this Agreement.
Seek specific performance of this Agreement.
Seek monetary damages.
9. Dispute Resolution
Any dispute arising out of or relating to this Agreement shall be settled by binding arbitration in accordance with the rules of the [Arbitration Organization]. The arbitration shall be held in [City, State]. The decision of the arbitrator shall be final and binding on the parties.
10. Governing Law and Jurisdiction
This Agreement shall be governed by and construed in accordance with the laws of the Republic of Kenya. Any legal action or proceeding arising out of or relating to this Agreement shall be brought exclusively in the courts of the Republic of Kenya.
11. Entire Agreement
This Agreement constitutes the entire agreement and understanding between the parties with respect to the subject matter hereof and supersedes all prior or contemporaneous communications, representations, or agreements, whether oral or written.
12. Notices
All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered personally, sent by certified or registered mail, return receipt requested, or sent by overnight courier service, addressed as follows:
If to the Investor: [Investor Name] [Investor Address]
If to the Developer: [Developer Name] [Developer Address]
13. Severability
If any provision of this Agreement is held to be invalid or unenforceable, such provision shall be struck from this Agreement and the remaining provisions shall remain in full force and effect.
14. Assignment
This Agreement may not be assigned by either party without the prior written consent of the other party.
15. Waiver
No waiver of any breach of this Agreement shall be deemed a waiver of any subsequent breach.
16. Confidentiality
Each party agrees to hold confidential all information received from the other party pursuant to this Agreement, except to the extent such information is already in the public domain or is required to be disclosed by law.
17. Force Majeure
Neither party shall be liable for any delay or failure to perform its obligations hereunder due to any cause beyond its reasonable control, including, without limitation, acts of God, war, terrorism, labor disputes, or governmental regulations.
18. Amendments
This Agreement may be amended only by a written instrument signed by both parties.
19. Termination
This Agreement may be terminated by either party upon [Number] days' written notice to the other party.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
[Investor Name]
By: [Signature]
Name: [Printed Name]
Title: [Title]
[Developer Name]
By: [Signature]
Name: [Printed Name]
Title: [Title]
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