Mortgage Agreement (Kenya)
MORTGAGE AGREEMENT
Land Act No. 6 of 2012 s.77 | Land Registration Act No. 3 of 2012
THIS MORTGAGE AGREEMENT is made on [Agreement Date]
BETWEEN:
(1) [Chargee Name] (CBK Licence: [Chargee CBK Licence]), of [Chargee Address] (the "Chargee"); and
(2) [Chargor Name] (NIC/BRS: [Chargor ID Number]; KRA PIN: [Chargor KRA PIN]), of [Chargor Address] (the "Chargor").
The Chargee and the Chargor are together referred to as the "Parties".
1. LOAN AND PURPOSE
1.1 The Chargee agrees to advance to the Chargor the principal sum of [Principal Amount] for the purpose of: [Loan Purpose].
1.2 The Loan shall bear interest at [Initial Interest Rate] per annum ([Interest Rate Type]), calculated on a reducing balance basis.
1.3 The Chargor shall repay the Loan in monthly instalments of [Monthly Instalment], commencing on [First Payment Date] and ending on [Final Payment Date], over a tenure of [Loan Tenure] years.
2. CREATION OF CHARGE
2.1 As security for the repayment of the Loan and all costs and interest, the Chargor hereby charges to the Chargee by way of a first legal charge all the Chargor's right, title, and interest in the property described below (the "Charged Property").
CHARGED PROPERTY:
Title Deed No.: [Title Deed Number]
Land Registry: [Land Registry Name]
Physical Address: [Property Address]
Land Area and Type: [Land Area Description]
Title Type: [Title Type]
Remaining Lease Term (if leasehold): [Lease Remaining Term]
Registered Valuation: [Property Valuation]
2.2 Total amount secured by this charge: [Total Secured Amount] (principal, maximum interest, and enforcement costs).
2.3 The Chargor shall present the signed charge instrument for registration at the [Land Registry Name] under the Land Registration Act No. 3 of 2012 within 30 days of execution. Stamp duty under the Stamp Duty Act Cap. 480 shall be paid by: [Stamp Duty Obligation].
3. CHARGOR'S COVENANTS
3.1 The Chargor covenants to: (a) maintain the Charged Property in good repair; (b) insure the Charged Property with [Insurer Name] (a licensed insurer under the Insurance Act Cap. 487) for its full replacement value, with the Chargee noted as co-insured; (c) pay all land rates due to the county government under the Rating Act Cap. 267 and all land rent due to the national government under the Land Act; (d) not create any further charge, lien, or encumbrance over the Charged Property without the Chargee's prior written consent; and (e) not dispose of the Charged Property without the Chargee's prior written consent.
4. DEFAULT AND POWER OF SALE
4.1 The Chargor shall be in default if: (a) any monthly instalment is unpaid for more than [Cure Period] after its due date; (b) the Chargor becomes insolvent under the Insolvency Act No. 18 of 2015; (c) the Chargor disposes of the Charged Property without the Chargee's written consent; or (d) any covenant in this Agreement is materially breached.
4.2 Upon default, the Chargee may charge default interest at [Default Interest Rate] on all overdue amounts from the due date of each missed instalment.
4.3 The Chargee may exercise the statutory power of sale under Section 90 of the Land Act No. 6 of 2012 after serving a written notice on the Chargor specifying the default and allowing a period of not less than 3 months (for residential property) to remedy the default.
4.4 Exercise of the power of sale shall comply with Sections 90 to 97 of the Land Act No. 6 of 2012, including the obligation to sell at market value and to account for any surplus proceeds to the Chargor after satisfying the secured debt and enforcement costs.
5. DISCHARGE OF CHARGE
5.1 Upon full repayment of all amounts secured by this charge, the Chargee shall execute and present a Discharge of Charge instrument at the [Land Registry Name] within 30 days under Section 95 of the Land Act No. 6 of 2012.
5.2 The cost of discharge registration shall be borne by the Chargor.
6. GOVERNING LAW AND DISPUTE RESOLUTION
6.1 This Agreement is governed by the laws of Kenya, including the Land Act No. 6 of 2012, the Land Registration Act No. 3 of 2012, and the Law of Contract Act Cap. 23.
6.2 Disputes shall be resolved by: [Dispute Resolution].
IN WITNESS WHEREOF, the Parties have signed this Agreement on the date first written above.
Chargee
________________
Signature
Chargor
________________
Signature
Witness
________________
Signature
What Is a Mortgage Agreement (Kenya)?
A Mortgage Agreement in Kenya sets out the rights, duties and consideration binding the parties to it.
Section 77 of the Land Act No. 6 of 2012 defines a charge as an encumbrance created by a chargor to secure the payment of a debt or the performance of an obligation. A charge over land must be distinguished from a mortgage under the pre-2012 legal regime — Kenya's current law uses the term "charge" for what was formerly called a legal mortgage, and the term "Mortgage Agreement" in contemporary Kenyan practice refers to the suite of documents (including the charge instrument and the loan agreement) that together create a residential or commercial property-secured loan.
The Land Registration Act No. 3 of 2012, administered by the Land Registrar at each county Land Registry, governs the registration of charges over land. Registration is constitutive — a charge takes effect in law only upon registration at the relevant Land Registry under Section 57 of the Land Registration Act No. 3 of 2012. An unregistered charge is not void but takes effect as a contractual obligation between the parties without binding third parties or taking priority over a subsequently registered interest.
The Central Bank of Kenya regulates mortgage lending by commercial banks under the Banking Act Cap. 488 and the CBK Prudential Guidelines for Banks, which prescribe loan-to-value (LTV) ratios, valuation requirements, and provisioning norms for mortgage portfolios. The Kenya Mortgage Refinance Company (KMRC), a state-backed entity established under the Companies Act No. 17 of 2015, provides long-term refinancing to banks and SACCOs to enable them to offer longer-tenure and lower-rate mortgages.
The National Land Commission (NLC), established under Article 67 of the Constitution of Kenya 2010 and the National Land Commission Act No. 5 of 2012, oversees compliance with national land policy and may investigate complaints about fraudulent charges or illegal disposals of charged land. The Stamp Duty Act Cap. 480 administered by the Kenya Revenue Authority (KRA) imposes stamp duty on instruments charging land at a rate prescribed under the Act — currently 0.1% of the loan amount — payable before the charge is presented for registration.
The Kenya Bankers Association (KBA) has developed a model Mortgage Agreement for use by commercial banks, but the provisions of the Land Act No. 6 of 2012 and the Land Registration Act No. 3 of 2012 set mandatory minimum requirements that all mortgage agreements must respect regardless of the parties' contractual freedom.
The legal framework governing the Mortgage Agreement (Kenya) in Kenya draws on several key statutes and regulatory bodies. Under the Central Bank of Kenya Act (Cap. 491), the Central Bank of Kenya (CBK) regulates banking. The Capital Markets Authority (CMA) regulates securities under the Capital Markets Act (Cap. 485A). Section 84 of the Bills of Exchange Act (Cap. 27) governs promissory notes. The Kenya Revenue Authority (KRA) administers tax obligations. The Microfinance Act No. 19 of 2006 regulates microfinance institutions. The Hire Purchase Act (Cap. 507) governs credit sale agreements. Parties executing a Mortgage Agreement (Kenya) in Kenya should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Land Act No. 6 of 2012 sets the foundational requirements.
When Do You Need a Mortgage Agreement (Kenya)?
A Mortgage Agreement in Kenya is required whenever a lender advances funds secured by a charge over the borrower's registered land, including residential home loans, commercial property finance, agricultural land loans, and construction finance.
A Mortgage Agreement is needed when a Kenyan homebuyer borrows from a commercial bank regulated by the CBK under the Banking Act Cap. 488 to finance the purchase of a residential property. The bank requires a charge over the property as security for the loan, and the charge must be registered at the relevant county Land Registry under the Land Registration Act No. 3 of 2012 before the bank disburses funds. The Mortgage Agreement documents the loan terms, the charge creation, and the parties' rights and obligations throughout the loan period.
A Mortgage Agreement is required when an individual uses owned land as collateral to raise a business loan from a bank or microfinance institution. The lender will insist on a registered charge over the land and a formal Mortgage Agreement that sets out the repayment terms, default consequences, and the lender's power of sale under Section 90 of the Land Act No. 6 of 2012.
A Mortgage Agreement is needed when a Savings and Credit Cooperative (SACCO) regulated by the SACCO Societies Regulatory Authority (SASRA) advances a mortgage-backed loan to a member for property purchase or construction. The SACCO must register a charge at the Land Registry and execute a Mortgage Agreement to document the transaction and support SASRA compliance requirements under the SACCO Societies (Deposit-Taking Sacco Business) Regulations 2010.
A Mortgage Agreement is required when a private individual or family trust advances funds to a related party — secured by a charge over property — to confirm the arrangement is documented, the charge is registered, and the lender's security interest is protected against subsequent encumbrances registered by third-party creditors.
A Mortgage Agreement is needed when a housing developer raises construction finance from a bank or private investor, using the development site as security. The agreement documents the drawdown structure, the conditions for each advance, the interest during construction, and the release of security upon project completion and loan repayment.
What to Include in Your Mortgage Agreement (Kenya)
A Kenya Mortgage Agreement under the Land Act No. 6 of 2012 s.77 and the Land Registration Act No. 3 of 2012 must contain the following essential elements to be registrable at the Land Registry and enforceable under Kenya's land law framework.
Parties and Identification: Full legal names of the chargor (borrower) and the chargee (lender); National Identity Card (NIC) number for individuals or Business Registration Service (BRS) number for companies; KRA PIN under the Income Tax Act Cap. 470; and addresses corresponding to the personal details in the Land Registry records to confirm the charge instrument matches the registered proprietor's details exactly.
Property Description (Charged Land): The title deed number (e.g. Title No. Nairobi/Block 100/Plot 20), the county Land Registry in which the title is registered, the area in hectares or square metres, and the physical address of the property. The description must match the Land Registry records exactly. Where the title is a leasehold from the national or county government under the Land Act No. 6 of 2012 s.54, the remaining lease term must be stated, as the charge cannot extend beyond the lease term.
Loan Amount and Secured Obligation: The principal loan amount in Kenya Shillings (KES), the interest rate and calculation method, the total secured amount (principal plus maximum interest accrued over the loan term plus enforcement costs), and a statement that the charge secures the repayment of the loan and all associated costs under the Mortgage Agreement.
Repayment Terms: Monthly instalment amounts, the amortisation period (typically 10 to 25 years for residential mortgages in Kenya), the first and last payment dates, the interest rate type (fixed or variable linked to the CBK base rate or the Kenya Banks' Reference Rate (KBRR)), and the conditions for interest rate variation.
Charge Registration Requirements: The obligation of the chargor to present the signed charge instrument at the county Land Registry for registration within a specified period — typically 30 to 60 days — after execution; the stamping of the charge instrument under the Stamp Duty Act Cap. 480 at the KRA before presentation to the Land Registrar; and the obligation of the chargor to discharge any prior encumbrances on the title as a condition of disbursement.
Default and Power of Sale: Events constituting default under Section 90 of the Land Act No. 6 of 2012 including missed payments, material breach of covenant, insolvency of the chargor under the Insolvency Act No. 18 of 2015, or disposal of the charged property without the chargee's consent; the statutory notice requirements under the Land Act before the chargee may exercise the power of sale (minimum 3 months' notice in writing); and the procedure for exercising the power of sale including the obligation to sell at market value and account for surplus proceeds to the chargor.
Covenants of the Chargor: Obligations to maintain the property in good repair, insure the property with a licensed insurer under the Insurance Act Cap. 487 for its full replacement value with the chargee noted as co-insured, pay all land rates due to the county government under the Rating Act Cap. 267, pay all land rent due to the national government under the Land Act, and not create any further charge over the property without the chargee's written consent.
Valuation: The requirement for an independent valuation of the charged property by a registered valuer under the Valuers Act Cap. 532 administered by the Estate Agents Registration Board, conducted at the chargor's cost before execution of the Mortgage Agreement, confirming a minimum property value and loan-to-value (LTV) ratio acceptable to the chargee.
Governing Law and Discharge: The Mortgage Agreement is governed by the laws of Kenya, including the Land Act No. 6 of 2012 and the Land Registration Act No. 3 of 2012. Upon full repayment of the secured debt, the chargee must execute and present a Discharge of Charge instrument at the Land Registry within 30 days under Section 95 of the Land Act No. 6 of 2012. The forms-legal.com Kenya Mortgage Agreement template includes all mandatory elements under the Land Act No. 6 of 2012, the Land Registration Act No. 3 of 2012, and CBK Prudential Guidelines for mortgage lending institutions.
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Forms Legal. (2026). Mortgage Agreement (Kenya) (Kenya) [Legal document template]. Forms Legal. https://forms-legal.com/kenya/financial/loans/mortgage-agreement-kenya
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year = {2026},
howpublished = {\url{https://forms-legal.com/kenya/financial/loans/mortgage-agreement-kenya}},
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Frequently Asked Questions
A mortgage (charge) in Kenya is registered at the county Land Registry in which the title to the charged property is held, under the Land Registration Act No. 3 of 2012. The process involves four steps. First, the charge instrument (which incorporates or references the Mortgage Agreement) is drafted by an advocate of the High Court of Kenya as required by Section 3 of the Land Act No. 6 of 2012 — advocates may not be replaced by unqualified persons for land transactions. Second, the charge instrument and the Mortgage Agreement are presented to the Kenya Revenue Authority (KRA) for stamping under the Stamp Duty Act Cap. 480; stamp duty is paid at a rate prescribed under the Act (currently 0.1% of the secured amount). Third, the stamped charge instrument is submitted to the Land Registrar at the relevant county Land Registry together with the original title deed, the chargor's ID, the chargee's details, and the prescribed Land Registration Act forms and fees. Fourth, the Land Registrar registers the charge on the title deed and returns the endorsed title to the chargee to hold as security until the loan is repaid. The charge takes legal effect from the date of registration, not the date of execution.
The power of sale is the chargee's statutory right to sell the charged property to recover the outstanding debt when the chargor defaults, under Section 90 of the Land Act No. 6 of 2012. Before exercising the power of sale, the chargee must serve a written notice on the chargor specifying the default and requiring remedy within a period not less than 3 months (for individual residential borrowers) or such shorter period as is permitted for commercial properties under the Land Act. The chargee must sell the property in a manner likely to achieve the best price reasonably obtainable at the time of sale — Section 97 of the Land Act imposes an obligation to sell at market value and not to sacrifice the property at undervalue. The proceeds of sale are applied in the following order: enforcement costs, outstanding interest, principal outstanding, and then any surplus is paid to the chargor. A shortfall (negative equity) remains recoverable from the chargor as an unsecured debt. The National Land Commission may investigate complaints about unlawful exercise of the power of sale or below-market disposals of charged land.
A bank in Kenya may vary the interest rate on a variable-rate mortgage in accordance with the terms of the Mortgage Agreement, subject to regulatory requirements. Following the repeal of interest rate capping provisions of the Banking Act Cap. 488 in November 2019, banks are no longer bound to link rates to the Central Bank Rate (CBR). Variable-rate mortgages in Kenya are typically linked to the Kenya Banks' Reference Rate (KBRR) published by the Kenya Bankers Association or to the bank's base lending rate. The Mortgage Agreement must specify the rate variation mechanism, the minimum notice period (typically 30 to 60 days for a rate increase), and the borrower's right to redeem and refinance upon receiving a rate increase notice. The CBK Consumer Protection Guidelines issued under the Banking Act require banks to notify mortgage borrowers clearly and in writing of any interest rate changes and the consequential effect on the monthly instalment or loan tenure. The Central Bank of Kenya monitors banks' compliance with consumer protection requirements during on-site examinations.
Stamp duty on a mortgage (charge) instrument in Kenya is payable to the Kenya Revenue Authority (KRA) under the Stamp Duty Act Cap. 480 before the charge is presented for registration at the Land Registry. The current stamp duty rate for a charge instrument is 0.1% of the total secured amount (principal plus maximum interest). For example, a mortgage securing a KES 5,000,000 loan would attract stamp duty of KES 5,000. Stamp duty is paid through the KRA iTax portal or at a KRA Stamp Duty office, and the instrument is physically stamped or endorsed with an electronic stamp before submission to the Land Registrar. An unstamped or insufficiently stamped charge instrument is inadmissible as evidence in civil proceedings under Section 19 of the Stamp Duty Act Cap. 480. In addition to stamp duty on the charge instrument, the transfer of land upon which the mortgage is taken may separately attract stamp duty at 2% of the property value for citizens or 4% for non-citizens under the Stamp Duty Act. Both duties are administered by the KRA through its Land and Property Stamp Duty section.
A mortgagor (chargor) in Kenya has several statutory protections under the Land Act No. 6 of 2012. Section 90 requires the chargee to serve a minimum 3-month written notice before exercising the power of sale for residential properties, giving the mortgagor an opportunity to remedy the default or refinance. Section 97 requires the chargee to sell at market value, not at an undervalue that would benefit the purchaser at the mortgagor's expense. The mortgagor retains the equity of redemption — the right to redeem the property by paying all outstanding sums at any time before the completion of a sale by the chargee. The Insolvency Act No. 18 of 2015 provides automatic stay protections for insolvency proceedings that may temporarily halt enforcement. The High Court of Kenya has jurisdiction to grant injunctions restraining unlawful or procedurally defective exercises of the power of sale under the Land Act. The Constitution of Kenya 2010 under Article 40 protects the right to property and requires any deprivation of property to be in accordance with law and with prompt and fair compensation. The National Land Commission may investigate complaints about unlawful disposals of charged land under the National Land Commission Act No. 5 of 2012.
The limitation period for a mortgage (charge) secured over land in Kenya is 12 years from the date the debt secured by the charge becomes due, under the Limitation of Actions Act Cap. 22 read together with the Land Registration Act No. 3 of 2012. This 12-year period for land-secured debts is longer than the 6-year period that applies to unsecured simple contract debts under Section 4(1) of the Limitation of Actions Act Cap. 22. A written acknowledgment of the secured debt signed by the chargor, or a part-payment of the outstanding amount, restarts the limitation period under Section 21 of the Limitation of Actions Act. Where the charge is registered and the chargee wishes to exercise the power of sale under Section 90 of the Land Act No. 6 of 2012, the enforcement action must be commenced within the 12-year limitation period from the date of default. Chargees should not delay enforcement once a borrower is clearly unable to resume repayments, as the longer limitation period does not create unlimited time to act.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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