Charge Over Land (Kenya)

A Charge Over Land in Kenya documents the charge over land in a form the parties and authorities can rely on.

Part IX of the Land Act No. 6 of 2012 (Sections 78 to 107) sets out the thorough legal framework for charges over land in Kenya. Section 78 defines a charge as an interest in land securing the payment of money or the performance of an obligation. Section 81 requires a charge to be created by a written instrument executed as a deed and registered at the relevant Land Registry operated under the Land Registration Act No. 3 of 2012. An unregistered charge does not take effect as a legal charge — it may constitute only an equitable interest, enforceable at the discretion of the Environment and Land Court (ELC) established under Article 162 of the Constitution of Kenya 2010.

The Environment and Land Court (ELC) has jurisdiction over all disputes relating to charges over land in Kenya. The ELC has, in decisions such as Housing Finance Company of Kenya Limited v Various Defendants, confirmed that a registered charge grants the chargee the right to appoint a receiver, take possession of the charged property, and sell the property by public auction upon the chargor's default — subject to the statutory notice requirements in Section 90 of the Land Act No. 6 of 2012, which requires 90 days' notice of intended sale to the chargor.

A Charge Over Land must be distinguished from a legal mortgage under the pre-2012 regime, a caution, and an inhibition. A caution (registered under Section 71 of the Land Registration Act) is a temporary protective entry; it does not grant a security interest. An inhibition restricts dealings in land pending resolution of a dispute. A charge grants positive security rights including the power of sale under Section 90 of the Land Act, whereas a caution merely prevents dealings. For security transactions involving agricultural land in Kenya's rural areas, the National Land Commission (NLC) may need to consent under Section 22 of the Land Registration Act.

The Central Bank of Kenya (CBK) banking prudential guidelines require that charges offered as security by borrowers from banks and financial institutions licensed under the Banking Act (Cap. 488) be registered at the Land Registry and be supported by a current land search, a valuation report from a registered valuer, and a title verification by an Advocate of the High Court of Kenya. Kenya Commercial Bank (KCB), Equity Bank, Co-operative Bank of Kenya, and other lenders routinely use the Charge Over Land as the primary security instrument for mortgage products, SME loans, and personal loan facilities secured on land.

A Kenya Charge Over Land is required whenever land or property is offered as security for a loan, credit facility, or obligation, and arises in several distinct situations under the Land Act No. 6 of 2012.

A Charge Over Land is required when an individual or company applies for a mortgage loan from a bank licensed by the Central Bank of Kenya (CBK) — such as Kenya Commercial Bank (KCB), Equity Bank, or Housing Finance Company of Kenya (HFCK) — using a freehold title deed or a leasehold Certificate of Lease as collateral. The bank will not disburse the loan until the charge is executed, registered at the relevant Land Registry, and verified by the bank's advocate.

A Charge Over Land is needed when a company registered with the Business Registration Service (BRS) seeks a business loan or overdraft facility secured on commercial property. Corporate charges must be registered both at the Land Registry and at the BRS as a company charge under Section 95 of the Companies Act No. 17 of 2015 within 30 days of creation to be valid against a liquidator and creditors.

A Charge Over Land is required when a private lender — for example, a microfinance institution, a development finance institution, or an individual — advances funds to a borrower on the security of land. The private lender has the same rights as a bank under Part IX of the Land Act, including the right to sell the land upon 90 days' statutory notice of default.

A Charge Over Land is needed when a chama investment group that has acquired land collectively through a company or trust structure uses that land as collateral to obtain a bank loan for further investment. The Charge Over Land records the group's collective security obligation against the registered title.

A Charge Over Land is required when property is used as security to guarantee the obligations of a third party — for example, a parent company or a related individual — under a third-party charge arrangement recognised by the Environment and Land Court (ELC) and Kenyan banking practice.

Stamp duty on a Charge Over Land in Kenya is assessed under the Stamp Duty Act (Cap. 480). The applicable rate for mortgage and charge instruments is prescribed in the Schedule to the Stamp Duty Act and must be paid to the Kenya Revenue Authority (KRA) before the charge instrument is registered at the Land Registry.

A Kenya Charge Over Land under the Land Act No. 6 of 2012 and the Land Registration Act No. 3 of 2012 must include the following essential elements to be valid and registrable at the Land Registry.

Parties: Full legal names, National Identity Card (NIC) numbers or BRS Registration Numbers, KRA PINs, and addresses of the chargor (landowner/borrower) and chargee (lender). For corporate chargors, the BRS Registration Number must match the BRS register exactly.

Property Description: The exact description of the charged land as it appears on the title document — including the Land Reference Number (L.R. No.), the title deed or Certificate of Lease number, the area in hectares or square metres, the county and sub-county, and any improvements on the land. The description must match the Land Registry records.

Principal Amount Secured: The amount of the loan or obligation secured in Kenya Shillings (KES), the interest rate (expressed as a percentage per annum), and the total amount secured including principal, accrued interest, legal costs, and enforcement expenses. Section 80 of the Land Act No. 6 of 2012 requires the charge instrument to state the amount secured.

Repayment Terms: The loan term, instalment amounts, payment dates, and the consequences of default — including the chargor's right to cure default before the chargee exercises enforcement rights.

Chargee's Enforcement Rights: The statutory enforcement powers under Part IX of the Land Act No. 6 of 2012 — appointment of a receiver, taking possession, and power of sale. Section 90 of the Land Act requires the chargee to serve a 90-day statutory notice of sale on the chargor before exercising the power of sale.

Restrictions on Chargor's Dealings: The chargor's obligations not to sell, sub-charge, lease, or otherwise deal with the charged land without the chargee's prior written consent. This covenant protects the chargee's security interest pending repayment.

Insurance and Maintenance: The chargor's obligation to maintain adequate insurance on improvements, pay land rates to the county government, pay land rent to the National Land Commission (NLC) for leasehold titles, and keep the property in good repair — standard covenants required by Kenyan banks and financial institutions.

Discharge: The mechanism for releasing the charge upon full repayment — a Discharge of Charge instrument executed by the chargee and registered at the Land Registry under Section 103 of the Land Act. The forms-legal.com Charge Over Land template covers all elements required for a valid, registrable charge under Kenyan law.

Registration and Stamp Duty: The charge must be registered at the appropriate Land Registry within the county where the land is situated and stamp duty must be paid to the Kenya Revenue Authority (KRA) under the Stamp Duty Act (Cap. 480) before registration. Disputes are heard before the Environment and Land Court (ELC) under Article 162 of the Constitution of Kenya 2010.

Additional compliance elements for a Charge Over Land (Kenya) used in Kenya include: Under the Land Act No. 6 of 2012, the National Land Commission (NLC) manages public land in Kenya. Section 56 of the Land Registration Act No. 3 of 2012 governs land transfers. The Environment and Land Court (ELC) has exclusive jurisdiction under Article 162(2)(b) of the Constitution of Kenya 2010. The Land Control Act (Cap. 302) requires Land Control Board consent for agricultural land transactions. The Stamp Duty Act (Cap. 480) imposes duty on property transfers at rates of 2% (rural) and 4% (urban). Forms-legal.com provides this template as a starting point for Kenya-compliant documentation.